SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549



                                   FORM 10-KSB

(Mark One)

/X/      ANNUAL  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
         EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 1999

/ /      TRANSITION  REPORT  PURSUANT  TO SECTION 13 OR 15(d) OF THE  SECURITIES
         EXCHANGE ACT OF 1934

For the transition period from _____ to ____

                         Commission file number 1-13587

                         QUERYOBJECT SYSTEMS CORPORATION
--------------------------------------------------------------------------------
             (Exact Name of Registrant as Specified in its Charter)


              Delaware                                94-3087939
    -------------------------------         ------------------------------------
    (State or other jurisdiction of         (IRS Employer Identification Number)
    incorporation or organization


        One Expressway Plaza , Suite 208, Roslyn Heights, New York 11577
--------------------------------------------------------------------------------
             (Address of Principal Executive Offices)          (Zip Code)

       Registrant's telephone number, including area code: (516) 228-8500

          Securities registered pursuant to Section 12(b) of the Act:

                     Common Stock, par value $.003 per share

          Securities registered pursuant to Section 12(g) of the Act:

                                      None

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                                                             Yes  /X/     No ___


<PAGE>

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure  will be contained,  to
the best of the  Registrant's  knowledge,  in  definitive  proxy or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB. /X/

         State the  issuer's  revenues  for its most  recent  fiscal  year:  The
issuer's revenues for the fiscal year ended December 31, 1999 were $1,774,109.

         The aggregate  market value of the voting stock held by  non-affiliates
of the Registrant computed by reference to the price at which the stock was sold
on March 28, 2000 was  approximately:  $60,000,000.  Solely for the  purposes of
this  calculation,  shares held by directors and officers of the Registrant have
been  excluded.  Such  exclusion  should  not be  deemed a  determination  or an
admission by the Registrant that such  individuals  are, in fact,  affiliates of
the Registrant.

         Indicate  the  number of  shares  outstanding  of each of the  issuer's
classes of common stock, as of the latest  practicable  date: At March 28, 2000,
there were outstanding  9,712,545 shares of the Registrant's Common Stock, $.003
par value.

                       DOCUMENTS INCORPORATED BY REFERENCE

         Certain portions of the  Registrant's  definitive proxy statement to be
filed not later than April 30, 2000 pursuant to Regulation 14A are  incorporated
by  reference  in Items 9 through 12 of Part III of this  Annual  Report on Form
10-KSB.

         Transitional Small Business Disclosure Format (check one):


                  Yes   / / No /X/



                                       -2-

<PAGE>

                                     PART I


ITEM 1.           DESCRIPTION OF BUSINESS



Company Overview

         QueryObject  Systems  Corporation (the "Company")  develops and markets
proprietary  business  intelligence  software  solutions  that  enable  business
managers  to make  strategic  decisions,  leveraging  existing  corporate  data.
Through  the  evolution  of  technology,  businesses  operating  in  transaction
intensive  industries,  such as  telecommunications,  healthcare,  insurance and
financial  services,  have  dramatically  increased  their ability to gather and
store large amounts of data generated from various  sources.  Such data contains
information  that,  if extracted  effectively  and  efficiently,  can be used to
enhance strategic corporate  development.  While companies have invested heavily
in capturing  data, they have only begun to focus  significant  resources on the
management  and  analysis of such data;  consequently,  the data  gathering  and
analysis industry is experiencing  significant growth. The Company developed its
products  in  response  to the need by  companies  to analyze  these  increasing
volumes of data.

         In the third quarter of 1996, the Company began the process of shifting
its focus from using its  proprietary  technologies  to  provide  contract  data
analysis services, to the sale and support of its proprietary products,  thereby
enabling  customers  to do their own  analysis.  The process  was  substantially
completed in 1998. The Company has realized limited sales of its products.

         The Company was  incorporated  in Delaware in 1997 and is the successor
by merger to CrossZ International, Inc., a California corporation,  incorporated
in 1989. In May 1998,  the name of the Company was changed from CrossZ  Software
Corporation  to  QueryObject  Systems  Corporation  to reflect the change in the
Company's  focus.  Unless  otherwise  indicated,  references to the Company also
include its predecessor and its  subsidiaries,  internetQueryObject  Corporation
("IQO") and QueryObject Systems  Corporation,  Ltd. In January 2000, the Company
consummated a one- for-three  reverse stock split of its Common Stock. All share
and per share amounts and option and warrant  information  in this Annual Report
on Form 10-KSB have been  restated to reflect the  one-for-three  reverse  stock
split.


Industry Background

         Data marts are component technologies in the "Business Intelligence" or
more broadly, the "Data Warehousing" market. International Data Corp. ("IDC"), a
leading technology  consulting/research company, estimates that the size of this
market  will  increase to over $5.0  billion by the end of 2000,  with an annual
compound growth rate of  approximately  30%. The stimulus for this growth is the
exceptional  returns on capital  experienced  by companies that have invested in
data  warehousing  and  related  technologies.  IDC  studied 62  companies  that
invested an average of $2.2 million each in data  warehousing and found that the
average return on investment after three years was 401%.

         There are generally  three  components to an  enterprise-wide  business
intelligence system:

         - Data warehouse: where the unprocessed corporate data is stored in one
place.  Data warehousing  involves the controlled,  periodic loading of selected
historical data from various databases into a central repository in a summarized
and  standardized  format that is made available to users on a read-only  basis.
This  approach  provides  users  with  better  access  to  critical  data in the
organization's  relational database management systems ("RDBMS"),  but users are
not generally  familiar  enough with  database  syntax to extract data from data
warehouses without assistance from information technology ("IT") personnel.


                                       -3-

<PAGE>

         - Data  mart:  subject-specific  subsets  of  the  data  warehouse.  An
advanced  form  of  data  mart  contains  pre-calculated  answers  stored  in  a
multidimensional data mart known as a data cube.

         - Data analysis:  accessing  information and discovering and extracting
hidden patterns or trends from databases and data marts.

         Despite  the  size  of this  market,  and the  strategic  value  of the
"business  intelligence"  available from corporate  data,  businesses  developed
their  information  systems  solely to support  transactional  data  processing,
collecting  and  storing  the data  necessary  to  facilitate  such  processing.
Therefore,   data  storage   methods   designed  in   contemplation   of  narrow
transactional goals are being burdened with the new goals of strategic analysis.
Such  systems  do not fully  address  the need to  transform  data  into  useful
information.

         In the business  intelligence  area,  RDBMS are most frequently used as
data  repositories,  both  for  historical  data as a "data  warehouse"  and for
analytical  data as a  "datamart."  RDBMS are tuned to optimize  support of high
volume on-line transaction  processing ("OLTP")  applications such as data entry
and do not support the extraction and analysis of that data.


Limitations of Traditional On-Line Analytical Processing Products

         Although a data  warehouse  is useful,  because it contains  all of the
data that can be analyzed, its immense size makes business intelligence analysis
inefficient  and unwieldy.  Within any data  warehouse  there will be extraneous
data (data  unrelated to the goal of the analysis)  that must be  disregarded in
any specific or  particular  analyses.  For  example,  if a company is trying to
determine  the most  relevant  factors in  retaining  its  customers  for repeat
purchases,  certain  elements  of  each  customer's  data  profile  will  have a
relatively high correlative value, such as income,  gender or occupation,  while
other elements will have a relatively low correlative  value, such as first name
or social  security  number.  A data  warehouse  contains all the data elements,
however,  it does not contain the additional  information  necessary to identify
those data elements relevant to a business goal.

         The response to the  inefficiencies  of the data warehouse has been the
development  of the  data  mart.  However,  much of the  traditional  data  mart
technology is still based on the relational model employed in the data warehouse
and often does not present that data in a fully  transformed  form most suitable
for analytical as opposed to storage purposes.

         The Company  believes  enterprises  are searching for ways to transcend
these limitations,  to develop data marts that more efficiently support Business
Intelligence   analytical  techniques,   in  less  time,  with  a  more  precise
correlation between data mart content and the user's business objectives. At the
same time,  such  product  must use  existing  hardware and systems and minimize
impact on critical IT resources.

         The  Company   believes  that  its   QueryObject   System  provides  an
enterprise-wide   solution  to  the  problems  of  first  generation  data  mart
technology limitations.


QueryObjet System(R)

         QueryObject  System employs  advanced  mathematics  to create  compact,
portable and accurate  representations of data sets, called  QueryObjects,  from
the data repository. In real-world applications, a QueryObject System-based data
mart can be tens, even hundreds of times smaller than the source data warehouse,
thereby making terabyte-class  databases small enough to transport on a standard
laptop.  QueryObject System technology can reside on mainframe,  midrange (UNIX)
or  Windows  NT  systems.  In  October  1997,  the  Company  began to  implement
full-scale marketing of QueryObject System as a software product.  Previous uses
of the  QueryObject  technology  required  certain  consulting  services and was
promoted  selectively  through direct sales channels,  at several industry trade
shows, and to potential


                                       -4-

<PAGE>

business  partners.  The  current  release of  QueryObject  System  has  reduced
consulting  requirements  and is capable of running on additional UNIX operating
systems and the Windows NT operating system.

         The Company  believes  that  QueryObject  System  offers the  following
advantages over conventional data marts:

         o Plug and Play with Raw Data:  QueryObject  System  allows the user to
extract  virtually  unlimited  amounts of raw data  directly  from existing data
warehouse  or a  production  database,  without the need to  aggregate  and then
summarize the data.

         o Fresher Data:  Performing a full scan on a data warehouse to create a
data mart is time intensive,  consumes CPU resources,  and renders the warehouse
virtually  inaccessible to users with other  purposes.  In fact, most businesses
find it difficult to perform more than one full scan on their data  warehouse in
a day and often require a week or more to create a data mart. QueryObject System
was  designed  specifically  for high  speed  data  mart  creation  without  the
management overhead and negative performance  implications  associated with data
warehouses and other  conventional data  repositories,  allowing users to create
dozens of data  marts in a single  day.  Moreover,  because  QueryObject  System
technology  can reside on MVS,  UNIX or Windows NT servers,  the user can create
the data mart on the  system  that  makes the most  sense for the  business  and
insulate  mission  critical  applications  and  databases  from the  performance
degradation normally associated with full database scans.

         o Lower Cost:  As a result of their  ability to load raw data  directly
into QueryObject System, users can reduce or eliminate  time-consuming work such
as extracting,  cleaning,  normalizing,  formatting and summarizing  data before
loading it into a data warehouse. In addition, large amounts of operational data
can be preserved for future analysis at far lower cost than a data warehouse.

         o Greater Scalability and Speed: The Company believes QueryObject based
data marts contain more data in less storage space than  traditional  data marts
such as Hyperion  Essbase and Oracle Express.  A single  QueryObject can contain
the  representation  of hundreds of millions of records,  tens of  thousands  of
values in each field or column and billions of potential query answers.  The use
of proprietary  algorithmic  equations  allows  QueryObject-based  data marts to
store more data in a fraction of the storage space needed by  conventional  data
marts. Even with data marts that measure in the hundreds of millions of records,
the retrieval can often be executed in seconds or less.

         o  Greater  Multi-User  Support:  QueryObjects  can  support  unlimited
numbers of concurrent  users since all possible  answers to all possible queries
are contained  therein,  and impose  virtually no degradation on processing,  in
contrast to  conventional  data marts that consume  large  amounts of processing
power in computing potential answers.

         o Greater Mobility:  When business intelligence was a function confined
to a small cadre of analysts and  specialists,  it was  acceptable  for business
intelligence  systems  to reside in a single,  central  location.  In  contrast,
because  QueryObjects  can reside on desktops,  laptops and Web  servers,  or be
distributed  over local area networks,  they allow  businesses to deploy complex
data marts to thousands of users in an enterprise,  using  existing  information
technology infrastructure.

The QueryObject Strategy

         The  Company's   objective  is  to  establish  the  QueryObject  System
technology  as a  ubiquitous  data  mart  standard  for  data  analysis  in data
intensive  industries such as  telecommunications,  healthcare and insurance and
financial services. Key elements of the Company's strategy include:

         Establish Technology Leadership.  The Company has developed a number of
technologies  specifically  to meet the  scalability,  capacity,  usability  and
functionality requirements of data mart software. In particular, the Company has


                                       -5-

<PAGE>

developed a proprietary high performance mathematical algorithm suite to compute
and  represent  all possible  answers,  univariates,  uniques and  intermediates
across very large databases.  These answers are stored in highly compact formats
that do not require  significant  server memory or  processing  power to provide
instantaneous query response. The Company intends to continue to develop what it
believes  are  innovative  technologies  and  features to address  the  specific
business  requirements of data marts in the areas of  performance,  scalability,
data integrity,  system administration and decision analysis  capabilities.  The
Company  intends to continue to invest in its technology in order to enhance its
existing data mart products.

         Develop  Strategic  Relationships.  To  accelerate  the adoption of the
QueryObject System as a standard platform business intelligence application, the
Company  has  begun to form  strategic  relationships  with  many  providers  of
business intelligence software applications, tools and services. The Company has
established license agreements and VAR ("value-added  resellers")  relationships
with several companies that have resulted in revenue for the year ended December
31, 1999, including AmerInd, Inc., Dimension Sweden and CZ Solutions S.p.A.

         Expand Open Systems Approach.  The Company seeks to maximize the market
for its products by designing them to adhere to industry standards, which allows
the sharing of data across  platforms  and  software  applications.  QueryObject
technology operates with a wide range of third-party  front-ends,  databases and
operating  systems  via an open  architecture  that  supports  Microsoft's  open
database  connectivity (ODBC) and object linking and embedding database (OLE/DB)
standards  and the Java Data Base  Connectivity  standard  (JDBC)  designed  for
Internet tools. The Company believes that its open systems approach represents a
competitive  advantage versus  competing  solutions that are more proprietary in
nature, and as such intends to continue to adhere to industry standards.

         Leverage Existing  Investments in Information  Technology.  The Company
believes that it has designed QueryObject System to take advantage of customers'
existing IT investments,  thereby  accelerating the acceptance of such software.
QueryObject  System is  designed to leverage  investments  in personal  computer
hardware and software and to integrate data from existing relational  databases,
legacy  repositories  and emerging data  warehouses.  The Company also leverages
third party-based consulting services and distribution capabilities to enable it
to focus on providing  industry  leading  business  intelligence  data  delivery
software.

         Target  Horizontal  Markets/New  Applications and Markets.  Because the
delivery of relevant data to business  intelligence  applications  is a critical
corporate  function in a wide variety of industries,  the Company  believes that
its  solutions  are  potentially  applicable  in a broad range of  markets.  The
Company  is  currently  targeting  customers  in  telecommunications,  financial
services and insurance and health care.

         Provide Superior Customer Service.  The Company believes that providing
superior  customer  service is critical  for  customer  success.  The  Company's
strategy is to deliver  technology  and  services  that enable its  customers to
implement  quickly  and  cost  effectively   integrated  data  mining/data  mart
applications.  The Company provides its customers with a comprehensive  array of
services, including software updates, documentation updates, product maintenance
and  emergency  response.  The  Company  intends  to  maintain  its focus and to
continue  to invest in  service  and  support  to extend  its  customer  service
advantage.

         Expand Sales and Marketing Capabilities.  The Company intends to expand
its sales and marketing capabilities, both domestically and internationally,  by
increasing the size of its direct sales  organization and developing an indirect
channel of distributors such as original  equipment  manufacturers  ("OEMs") and
value added resellers ("VARs"). During 1997, the Company opened an office in the
United Kingdom to enter the European marketplace.

Products

         The Company's  QueryObject  System is a highly  scaleable and efficient
solution for providing business intelligence applications and users with all the
relevant information from corporate data.



                                       -6-

<PAGE>

         QueryObject   System  is  a  powerful  OLAP  data  mart  solution  that
transforms   mainframe   size   databases   into  highly  compact  and  portable
mathematical  representations  that fit onto standard PC laptops.  The following
table lists the QueryObject  System product line by configuration  and operating
system:



                   Product                Configuration        Operating System
QueryObject DBA                              Client             Win 95-98/NT
QueryObject Designer                         Client             Win 95-98/NT
QueryObject Engine                           Server             MVS, UNIX, NT
QueryObject Server Personal Edition          Client             Win 95-98/NT
QueryObject Server, Enterprise Edition       Server             UNIX, NT
QueryObject Server, Web Edition              Server             UNIX, NT
QueryObject Analyzer                         Server             UNIX, NT


         QueryObject DBA (Data Base Administrator)  provides administrators in a
Windows  based  environment  with a tool  to  manage  the  process  of  reading,
synchronizing and staging source, atomic level data in QueryObject System. Using
standard drag and drop actions,  data  administrators  can map their source data
into the QueryObject System repository,  the QueryObject Ready File. The Company
believes that  QueryObject  DBA users benefit from working with a graphical tool
that understands the complexities of both legacy and warehouse data.

         QueryObject  Designer  enables  end users to design and build their own
QueryObjects.   Working  in  a  familiar  Windows   environment,   users  create
QueryObjects by selecting a subset of the fields from the QueryObject Ready file
using a drag and drop interface. The Company believes that the end user benefits
from an environment that requires no programming,  gives a visual representation
of the QueryObject, and is able to process hundreds of millions of data records.

         QueryObject  Engine is  designed to (i) work with large  quantities  of
data,  (ii) read a variety of data  formats  and (iii)  process the data into an
analytical repository,  and then into multiple  QueryObjects.  From this staging
area,  multiple  QueryObjects are produced in an efficient manner on the server.
The Company  believes that users are protected  from the server  environment  by
using  QueryObject  DBA and QueryObject  Designer,  yet they gain the power of a
server behind their business  intelligence system.  QueryObject Engine runs on a
wide variety of server  platforms from MVS to UNIX to Windows/NT.  The resulting
QueryObject can be moved to a user's individual  personal computer or managed by
the QueryObject Server.

         Unlike  other data mart systems  that  require  significant  amounts of
preprocessing and data aggregation,  QueryObject Engine is able to perform these
tasks automatically for each QueryObject.  The Company believes that the ability
to store and build a  QueryObject  from  detail  level  data  allows the user to
explore his data without the constraints of pre-aggregated  data sets that might
not  represent  the data in the manner that the user  requires  for a particular
business challenge.

         QueryObject   Server  allows  the   enterprise  to  locate  and  manage
QueryObjects on a centralized server infrastructure. QueryObject Server provides
enhanced  security and performance  across multiple  QueryObjects over corporate
internets (Web Edition) or corporate LANs (Enterprise  Edition).  Users may also
download  QueryObjects  to  their  individual  personal  computers  (QueryObject
Server, Personal Edition).


                                       -7-

<PAGE>

         QueryObject  Analyzer is a small JAVA based OLAP  analysis  tool. It is
automatically  downloaded  to a users WEB Browser and allows them to quickly and
easily analyze QueryObjects hosted on a customers WEB Server.  Analyzer provides
a zero administration client and can be used on any JAVA Browser,  Windows, UNIX
or Apple Macintosh.

         QueryObject  contains ODBC,  JDBC and OLE/DB  interfaces that allow end
users to work  within a  familiar  environment  of  industry  standard  business
intelligence data navigation and display tools.


Sales and Marketing

         The Company  markets and sells  QueryObject  System  through its direct
sales  organization  and intends to increase  the  proportion  of sales  through
indirect  channel  parties  such as VARs and  OEMs.  The  direct  sales  process
involves the generation of sales leads through direct mail and  telemarketing or
requests for proposal from  prospects.  The Company's field sales force conducts
multiple  presentations  and  demonstrations  of its products to management  and
users at the  customer  site as part of the direct  sales  effort.  Sales cycles
generally range from three months to six months or longer.

         The Company's  sales,  marketing and related  customer support services
organization  consisted of 15 full time  employees as of December 31, 1999.  The
sales staff is based at the Company's corporate  headquarters in Uniondale,  New
York and its European branch office outside of London,  England.  To support its
sales force,  the Company  engages in direct mail  solicitations,  telesales and
public relations and presents its products at trade shows.

         The Company  employs  sales and  technical  personnel who are teamed to
support a designated  account territory within a specified  vertical market. The
team is responsible for creating and maintaining local partner relationships and
resolving channel conflicts. To ensure the appropriate level of channel support,
the direct sales force is compensated  for sales that are made through  indirect
channel  partners  and those that are made  directly  to end  users.  A separate
partnering and business  development function is responsible for the recruitment
and maintenance of OEMs and national and global VARs and business partners.

         The Company believes that a high level of customer support is important
to the successful  marketing and sale of  QueryObject  System.  Maintenance  and
support  contracts,  which are typically for twelve months, are offered with the
initial  license,  and  may be  renewed  annually  at a cost  equal  to a  fixed
percentage  of the total  license fee paid.  Telephone  hotline  support will be
complemented  by an  internet  site that  provides  an  interactive  forum and a
repository for technical tips and skills.

internetQueryObject Corporation

         The  Company  formed  IQO in March  1999.  In March  2000,  IQO and the
Company entered into a exclusive licensing agreement, with a stated term through
December 31, 2005 (the "License Term") under which IQO was granted the exclusive
license to resell the Company's  database,  data streaming and data distribution
technology to Internet based  businesses.  For calendar years 2000 and 2001, IQO
is obligated to pay to the Company a Percentage  Royalty as follows;  20% on the
first  $1,000,000 of Adjusted Net Sales (as defined),  18% on Adjusted Net Sales
from  $1,000,001  to  $2,000,000,  15% on Adjusted Net Sales from  $2,000,001 to
$5,000,000,  and 12% on Adjusted Net Sales over $5,000,000.  The Company and IQO
will use their best  efforts to  renegotiate  these  royalty  rates for calendar
years 2002 and beyond. In the event that the Company and IQO are unable to agree
on  Percentage  Royalty rates for the remaining  License  Term,  the  Percentage
Royalty rates shall remain the same. IQO must also pay to the Company fees in an
amount equal to 25% of its revenue derived from the sale of maintenance services
relating to the licensed technology to its customers.



                                       -8-

<PAGE>

         To date,  IQO has signed one customer,  Global  Network  Privacy,  Inc.
There  can  be  no  assurance   whether  there  will  be  market  acceptance  by
Internet-based  businesses of the Company's  database,  data  streaming and data
distribution technology. As described under Note 14 to Notes to the Consolidated
Financial Statements,  IQO is seeking to raise $5,000,000 in a private placement
of its preferred stock. Such securities will not be and have not been registered
under the Securities Act of 1933, as amended,  and may not be offered or sold in
the  United  States  absent   registration  or  an  applicable   exemption  from
registration requirements.

Research and Development

         The Company  believes that its future success will depend in large part
on its ability to maintain and enhance its  leadership in business  intelligence
software  technology  and develop new products  that meet an expanding  range of
customer  requirements.  The Company's research and development  organization is
divided into teams  consisting of  development  engineers and quality  assurance
engineers.  The market  addressed  by the Company is very  sensitive  to product
quality and therefore the process is aimed at continuous  improvement of product
quality.   The  product   definition  is  based  upon  a  consolidation  of  the
requirements   from  existing   customers,   from  technical  support  and  from
engineering.  These are prioritized by the Company's  management to fit business
priorities and to meet the Company's vision.

         The  market  for the  Company's  software  is  characterized  by  rapid
technological  change,  frequent new product introductions and evolving industry
standards.  The  introduction  of products  embodying new  technologies  and the
emergence of new industry  standards can render existing  products  obsolete and
unmarketable. Therefore, the life cycles of the Company's products are difficult
to  estimate.  The  Company's  future  success  will  depend upon its ability to
enhance on a timely  basis its  current  products,  develop  and  introduce  new
products that keep pace with  technological  developments and emerging  industry
standards and address the increasingly sophisticated needs of its customers.

         As of  December  31,  1999,  the  Company's  research  and  development
organization  consisted of 16 full time  employees.  The Company  also  utilizes
independent contractors located in Europe for its development activities. During
1999 and 1998, research and development  expenses were $2,282,910 and $2,305,678
or 129% and 248% of total revenues,  respectively.  The Company will continue to
commit substantial resources to research and development in the future.

Proprietary Rights

         The  Company  relies  primarily  on  a  combination  of  copyright  and
trademark  laws,  trade  secrets,  confidentiality  procedures  and  contractual
provisions  to protect its  proprietary  rights.  The Company also believes that
factors such as the  technological  and creative  skills of its  personnel,  new
product  developments,  frequent  product  enhancements,  name  recognition  and
reliable  product  maintenance are essential in  establishing  and maintaining a
technology  leadership  position.  The Company  seeks to protect  its  software,
documentation and other written materials under trade secret and copyright laws,
which afford only limited protection.

         The Company currently has several registered  trademarks,  and may seek
additional  legal  protection for its products and trade names.  The Company has
invested  substantial  resources in  registering  the  trademarks and developing
branded  products and product  lines.  There can be no assurance  that the steps
taken by the  Company to protect  these  intellectual  property  assets  will be
sufficient  to deter  misappropriation.  Failure to protect  these  intellectual
property assets could have a material  adverse effect on the Company's  business
operations.  Moreover, although the Company is not aware of any lawsuit alleging
the Company's  infringement of  intellectual  property  rights,  there can be no
assurance  that any such  lawsuit  will not be filed  against the Company in the
future or, if such lawsuit is filed, that the Company would ultimately prevail.

         While the Company has applied for a patent for its  internet  streaming
technology, the Company is unable to predict whether it will receive such patent
and the Company currently has no other United States patents or


                                       -9-

<PAGE>

corresponding patent applications pending elsewhere.  Furthermore,  there can be
no  assurance  that  others will not  develop  technologies  that are similar or
superior to the  Company's  technology  or design around any patents that may be
owned in the future by the Company. Despite the Company's efforts to protect its
proprietary  rights,  unauthorized  parties may  attempt to copy  aspects of its
products  or to obtain  and use  information  that it  regards  as  proprietary.
Policing unauthorized use of the Company's products is difficult,  and while the
Company  is unable to  determine  the  extent  to which  piracy of its  software
products exists,  software piracy can be expected to be a persistent problem. In
addition,  the laws of some  foreign  countries  do not  protect  the  Company's
proprietary rights as fully as do the laws of the United States. There can be no
assurance that the Company's means of protecting its  proprietary  rights in the
United  States  or  abroad  will  be  adequate  or  that  competitors  will  not
independently  develop similar  technology.  The Company has entered into source
code escrow agreements with a limited number of its customers and VARs requiring
release of source code.  Such  agreements  provide that such parties will have a
limited,  non-exclusive  right to use such  code in the  event  that  there is a
bankruptcy  proceeding  by or against the Company,  if the Company  ceases to do
business  or if the  Company  fails to meet  its  contractual  obligations.  The
provision of source code may  increase the  likelihood  of  misappropriation  by
third parties.

         The Company is not aware that it is infringing any  proprietary  rights
of third parties.  There can be no assurance,  however,  that third parties will
not claim  infringement  by the Company  with respect to  QueryObject  System or
enhancements  thereto. The Company expects that software product developers will
increasingly  be subject to  infringement  claims as the number of products  and
competitors in the Company's  industry  segment grows and the  functionality  of
products in different  industry  segments  overlaps.  Any such  claims,  with or
without merit,  could be time consuming to defend,  result in costly litigation,
divert management's  attention and resources,  cause product shipment delays and
require the Company to enter into royalty or licensing agreements.  Such royalty
or licensing agreements,  if required,  may not be available on terms acceptable
to the  Company,  if at all.  In the  event of a  successful  claim  of  product
infringement  against the Company  and  failure or  inability  of the Company to
license the infringed or similar technology,  the Company's business,  operating
results and financial condition could be materially adversely affected.

Competition

         The market in which the  Company  competes  is  intensely  competitive,
highly fragmented and characterized by rapidly changing technology and a lack of
standards.  The Company's current and prospective competitors offer a variety of
multidimensional  data mart software  solutions  and generally  fall within five
categories:  (i) vendors of relational  database  products  sold for  analytical
(data warehouse and data mart) purposes such as Oracle,  Informix,  Sybase,  and
Microsoft;  (ii) vendors of multidimensional database and analysis software such
as Oracle (Express),  Hyperion (Essbase) and Microsoft (Plato); (iii) vendors of
OLAP/relational  database  software  such  as  Informix  (Red  Brick),  Sterling
Software  (Decision  Suite) and Seagate Software  (Holos);  (iv)vendors of query
acceleration  products such as Nucleus (Sand Technology) and IQ (Sybase);and (v)
vendors  of  vertical   software   applications   for  budgeting  and  financial
consolidation,  such as Hyperion Software Corporation  (Hyperion and FYPlan) and
consulting  vendors such as Arthur Andersen and Deloitte & Touche,  who focus on
customer applications in the telecommunications,  banking,  insurance and retail
industries.

         The Company  has  experienced  and  expects to  continue to  experience
increased competition from current and potential competitors,  many of whom have
significantly greater financial,  technical,  marketing and other resources than
the  Company.  Such  competitors  may be able to respond  more quickly to new or
emerging  technologies  and changes in customer  requirements  or devote greater
resources to the  development,  promotion  and sales of their  products than the
Company.  Also, certain current and potential  competitors may have greater name
recognition  or more extensive  customer bases that could be leveraged,  thereby
gaining market share to the Company's detriment.  The Company expects additional
competition  as other  established  and emerging  companies  enter into the OLAP
software  market and new products and  technologies  are  introduced.  Increased
competition  could result in price  reductions,  fewer customer orders,  reduced
gross margins and loss of market share, any of which would materially  adversely
affect the Company's business, operating results and financial condition.



                                      -10-

<PAGE>

         Current and potential  competitors  may make strategic  acquisitions or
establish  cooperative  relationships  among  themselves or with third  parties,
thereby  increasing  the  ability of their  products to address the needs of the
Company's  prospective  customers.  The  Company's  current  or future  indirect
channel  partners  may  establish  cooperative  relationships  with  current  or
potential competitors of the Company,  thereby limiting the Company's ability to
sell its products through particular distribution channels.  Accordingly,  it is
possible that new competitors or alliances among current and new competitors may
emerge and  rapidly  gain  significant  market  share.  Such  competition  could
materially  adversely  affect the Company's  ability to obtain new contracts and
maintenance  and support  renewals for existing  contracts on terms favorable to
the Company.  Further,  competitive  pressures may require the Company to reduce
the price of QueryObject  System,  which would  materially  adversely affect the
Company's business,  operating results and financial condition.  There can be no
assurance that the Company will be able to compete  successfully against current
and future  competitors,  and the failure to do so would have a material adverse
effect upon its business, operating results and financial condition.

         The Company competes on the basis of certain factors, including product
quality, first-to-market product capabilities,  product performance, ease of use
and customer support.  The Company believes it presently competes favorably with
respect  to each of  these  factors.  However,  the  Company's  market  is still
evolving and there can be no assurance  that the Company will be able to compete
successfully  against  current and future  competitors  and the failure to do so
successfully  will  have a  material  adverse  affect  upon  the  its  business,
operating results and financial condition.

Employees

         As of  December  31,  1999,  the  Company  had a total of 35 full  time
employees,  including 16 in research and development,  15 in sales and marketing
and related  customer  support  services  and 4 in  administration.  None of the
Company's employees is represented by a collective bargaining agreement, nor has
the Company  experienced any work stoppage.  The Company considers its relations
with its employees to be good.

         The Company's future operating  results depend in significant part upon
the continued service of its key technical and senior management personnel.  The
Company's  future success also depends on its continuing  ability to attract and
retain highly qualified technical and managerial personnel. Competition for such
personnel is intense, and there can be no assurance that the Company will retain
its key  managerial  or technical  personnel  or attract  such  personnel in the
future.  The  Company  has at times  experienced  and  continues  to  experience
difficulty in recruiting  qualified personnel and there can be no assurance that
the Company will not experience such  difficulties  in the future.  The Company,
either directly or through personnel search firms,  actively recruits  qualified
research  and  development,  financial  and sales  personnel.  If the Company is
unable to hire and retain  qualified  personnel  in the future,  such  inability
could have a material  adverse  effect on its  business,  operating  results and
financial condition.

Risk Factors That May Affect Future Results

         The Company operates in a rapidly changing  environment that involves a
number of risks, some of which are beyond the Company's  control.  The following
discussion highlights the most material of the risks.

We May Need Further Financing to Continue Our Operations.

         We have had a limited  operating history as a software product company,
have not made  significant  sales of our products and our revenues are difficult
to predict.  Our total revenues for the year ended December 31, 1999 and for the
year ended December 31, 1998 were $1,774,109 and $928,505,  respectively.  Given
our continued  operating  losses,  we may need additional  financing to continue
operations.  We  anticipate  that our cash and cash  equivalent  balance  may be
insufficient  to  satisfy  our cash flow  requirements  for more than 12 months,
since we are unable to predict if we will have sufficient  revenues to enable us
to continue our operations without additional financing. We have no commitments,
agreements  or  understandings  regarding  additional  financings  and we may be
unable to obtain additional financing on satisfactory terms or at all.


                                      -11-

<PAGE>

We Have Had a History of Operating  Losses and Project Future Losses;  Therefore
We Have Doubt About Our Ability To Continue as a Going Concern.

         At December 31, 1999, our accumulated deficit was $41,338,047.  For the
fiscal  years  ended  December  31,  1999 and 1998,  we  incurred  net losses of
$5,925,591  and  $7,294,032,  respectively.  We have incurred a net loss in each
year of our existence,  and have financed our operations primarily through sales
of equity and debt securities.  Our expense levels are high and our revenues are
difficult  to predict.  The  independent  accountants'  report on our  financial
statements for the year ended December 31, 1999 states that our recurring losses
from  operations  and negative cash flow from operating  activities  raise doubt
about our ability to continue as a going concern.

         We expect to incur net losses for the foreseeable  future. We may never
achieve or sustain  significant  revenues or  profitability  on a  quarterly  or
annual  basis in the future.  Our future  operating  results will depend on many
factors, including:

         o         product demand

         o         product and price competition in our industry

         o         our  success  in   expanding   our  direct  sales  force  and
                   establishing indirect channel partners

         o         our ability to develop and market products and control costs

         o         the  percentage of our revenues that is derived from indirect
                   channel partners

Our Revenues Depend On Sales of QueryObject  System and We Are Uncertain Whether
There Will be Broad Market Acceptance of this Product.

         Substantially  all of our  revenues  for  the  foreseeable  future  are
expected to be derived from sales of QueryObject System. Between January 1, 1995
and December 31, 1999, we had software  product revenue from only 32 QueryObject
System  installations,  including those sold pursuant to reseller agreements for
the resellers' own use. Our future  financial  performance  will depend upon the
successful  introduction and customer  acceptance of QueryObject  System and the
development of new and enhanced  versions of the product.  If we fail to achieve
broad market acceptance of QueryObject  System, it would have a material adverse
effect on our business, operating results and financial condition.

Our Common Stock Was Delisted From The Nasdaq SmallCap Market and There May Be a
Limited Trading Market for Our Stock.

         Effective  with the close of business on May 6, 1999,  our common stock
was delisted from the Nasdaq  SmallCap Market because of our inability to comply
with certain maintenance  standards required for continued listing on the Nasdaq
SmallCap Market,  including the net tangible asset  requirement.  We fell out of
compliance primarily as a result of continued losses during 1998.

         Now that our common stock has been  delisted  from the Nasdaq  SmallCap
Market,  trading in our common stock is conducted on the OTC Bulletin  Board and
the Boston Stock Exchange.  The Boston Stock Exchange has notified us that while
we currently meet its continuing listing requirements, the exchange will monitor
whether  continued  operating  losses will jeopardize our ability to comply with
its requirement that we have at least $500,000 in net tangible assets.

         If our common  stock is delisted  from the Boston Stock  Exchange,  our
common  stock  could  be  considered  a penny  stock.  Securities  and  Exchange
Commission  regulations  generally define a penny stock to be an equity security
that is not listed on Nasdaq or a national  securities  exchange  and that has a
market price of less than $5.00 per share,


                                      -12-

<PAGE>

subject to certain  exceptions.  The  regulations of the Securities and Exchange
Commission would require  broker-dealers to deliver to a purchaser of our common
stock a  disclosure  schedule  explaining  the penny stock  market and the risks
associated  with it.  Various sales  practice  requirements  are also imposed on
broker-dealers who sell penny stocks to persons other than established customers
and accredited investors (generally institutions).  In addition,  broker-dealers
must provide the customer  with current bid and offer  quotations  for the penny
stock,  the  compensation  of  the  broker-dealer  and  its  salesperson  in the
transaction  and monthly  account  statements  showing the market  value of each
penny stock held in the customer's  account.  If our common stock is traded only
on the OTC Bulletin Board and becomes subject to the  regulations  applicable to
penny stocks, investors may find it more difficult to obtain timely and accurate
quotes and execute trades in our common stock.

We Are  Seeking to Develop  Additional  Strategic  Relationships  With  Indirect
Channel  Partners to Increase Sales,  But We May be Unable to Attract  Effective
Partners and We Will Have Lower Gross Margins For Sales Through Indirect Channel
Partners.

         As part of our sales and  marketing  efforts we are  seeking to develop
additional  strategic  relationships  with indirect  channel  partners,  such as
original  equipment  manufacturers  and value-added  resellers,  to increase the
number of our customers.  We currently are investing,  and intend to continue to
invest,  significant resources to develop indirect channel partners. Our results
of operations  will be adversely  affected if we are unable to attract  indirect
channel partners to market our products  effectively and provide timely and cost
effective customer support and service. If we successfully sell products through
these sales channels,  the lower unit prices we expect to receive for such sales
will result in our gross margins being lower than if we had sold those  products
through our direct sales force.

We Are  Dependent  on a Few  Significant  Customers  and the  Loss  of a  Single
Customer Could Adversely Effect Our Business.

         For the fiscal year ended December 31, 1999,  four customers  accounted
for 72%,  and for the fiscal  year  ended  December  31,  1998,  four  customers
accounted  for 80%,  of our total  revenues.  We are  unsure if we will  realize
significant future revenues from any of these customers. We also expect that for
the  foreseeable  future a relatively  small number of customers and value added
resellers will account for a significant percentage of our revenues. The loss of
any such customer would have a material adverse effect on our operating  results
and financial condition.

We Are Dependent On a Few Key Personnel and We Need to Attract and Retain Highly
Qualified Technical, Sales, Marketing, Development and Management Personnel.

         Our future  performance  depends in significant part upon the continued
service of key technical, sales and senior management personnel. The loss of the
services of one or more of our key employees,  in particular,  Robert  Thompson,
our  President  and  Chief  Executive  Officer,  or Daniel  M.  Pess,  our Chief
Operating and Financial  Officer,  could have a material  adverse  effect on our
business,   operating  results  and  financial  condition.  We  have  employment
agreements with Mr. Thompson and Mr. Pess that expire in December 2001.

         Our future success also depends on our  continuing  ability to attract,
train and retain highly qualified technical,  sales, marketing,  development and
managerial  personnel.  Competition for such personnel is intense, and we may be
unable to retain key technical,  sales,  development and managerial employees or
attract,   assimilate  or  retain  other  highly  qualified  technical,   sales,
development  and  managerial  personnel in the future.  If we are unable to hire
such personnel on a timely basis, our business,  operating results and financial
condition could be materially adversely affected.

We  Lack  Proprietary  Technology  Protection  of  Our  Products  And  May  Risk
Infringement Upon Technology Developed by Others.

         We rely primarily on a combination  of trade  secrets,  confidentiality
agreements and contractual provisions to protect our proprietary technology.  We
license  rather  than sell our  software  and  require  licensees  to enter into
license


                                      -13-

<PAGE>

agreements  that impose  certain  restrictions  on their  ability to utilize the
software.  In  addition,  we seek to  avoid  disclosure  of our  trade  secrets,
including  but not  limited  to  requiring  those  persons  with  access  to our
proprietary  information to execute  confidentiality  agreements and restricting
access to our source code. These steps afford only limited protection.  While we
have applied for a patent for our internet streaming  technology,  we are unable
to predict  whether we will receive such patent and we have no other  patents or
patent  applications  pending.  Despite our  efforts to protect our  proprietary
rights,  unauthorized  parties  may attempt to copy  aspects of our  products or
obtain and use information that we regard as proprietary.  Policing unauthorized
use of our products may be difficult and costly,  and software piracy may become
a persistent  problem.  In addition,  the laws of some foreign  countries do not
protect  our  proprietary  rights  to as great an  extent  as do the laws of the
United  States.  We are unable to predict  whether our means of  protecting  our
proprietary  rights will be adequate or whether  competitors will  independently
develop the same technology.

         From time to time, third parties may assert patent, copyright and other
intellectual  property claims against us. If we are unable to license  protected
technology  that  may be used in our  products,  we  could  be  prohibited  from
manufacturing and marketing such products. We also could incur substantial costs
to redesign our products,  to defend any legal action taken against us or to pay
damages to any infringed  party.  Litigation,  which could result in substantial
cost to and  diversion of our  resources,  may be necessary to enforce our other
intellectual property rights or to defend us against claimed infringement of the
rights of others.

We Intend to Expand Our  International  Sales,  But There Are Substantial  Risks
Involved,  Including Effectively  Establishing Additional Foreign Operations and
Foreign Regulatory Concerns.

         Our  international  sales for the fiscal years ended  December 31, 1999
and December  31, 1998,  were  approximately  49% and 17% of our total  revenue,
respectively.  We intend to expand  our  international  operations  and to enter
additional  international  markets,  which will require  significant  management
attention  and  financial  resources  and could  adversely  affect our business,
operating  results  or  financial  condition.   To  expand  international  sales
successfully,  we must establish additional foreign operations,  hire additional
personnel and recruit additional international resellers and distributors. If we
are unable to do so in a timely  manner,  our growth,  if any, in  international
sales  will be  limited,  and our  business,  operating  results  and  financial
condition could be materially  adversely  affected.  We anticipate that expanded
international sales, if any, will be denominated in U.S. dollars. An increase in
the value of the U.S.  dollar  relative  to  foreign  currencies  could make our
products more expensive and,  therefore,  potentially  less competitive in those
markets.   Additional  risks  inherent  in  our  future  international  business
activities generally include:

         o         unexpected changes in regulatory requirements

         o         tariffs and other trade barriers

         o         costs of localizing products for foreign countries

         o         longer accounts receivable payment cycles

The Market Price of Our Common Stock Is Volatile.

         The market price of our common  stock has in the past been,  and may in
the future continue to be, volatile.  For instance,  between January 1, 1998 and
March 15, 2000,  the closing price of our common stock has ranged  between $1.41
and $16.50.  The  volatility of the market price of our common stock may further
increase now that our common stock has been  delisted  from the Nasdaq  SmallCap
Market.  A variety of events may cause the market  price of our common  stock to
fluctuate significantly, including:

         o         quarter to quarter variations in operating results



                                      -14-

<PAGE>

         o         adverse news announcements

         o         the introduction of new products

         o         market conditions in the industry

         In  addition,   the  stock  market  in  recent  years  has  experienced
significant price and volume  fluctuations  that have particularly  affected the
market prices of equity  securities of many  companies that service the software
industry and that often have been unrelated to the operating performance of such
companies.  These  market  fluctuations  may  adversely  affect the price of our
common stock.

We Have a Significant  Amount of Authorized But Unissued  Preferred Stock, Which
May Affect the Likelihood of a Change of Control in our Company.

         As of March 15, 2000, our Board of Directors has the authority, without
further action by the stockholders, to issue 3,355,000 shares of preferred stock
on such terms and with such rights,  preferences  and  designations,  including,
without limitation  restricting  dividends on our common stock,  dilution of the
voting power of our common stock and  impairing  the  liquidation  rights of the
holders of our common stock, as the Board may determine  without any vote of the
stockholders.  Issuance  of such  preferred  stock,  depending  upon the rights,
preferences and designations thereof may have the effect of delaying,  deterring
or  preventing  a  change  in  control.  In  addition,  certain  "anti-takeover"
provisions of the Delaware  General  Corporation  Law,  among other things,  may
restrict  the  ability  of our  stockholders  to  authorize  a merger,  business
combination or change of control.

We Have a Significant  Amount of Outstanding  Options,  Warrants and Convertible
Preferred Stock.

         As of  March  15,  2000 we have  outstanding  options  to  purchase  an
aggregate of 2,381,845 shares of our common stock at a weighted average exercise
price of $4.75 per share and  outstanding  warrants to purchase an  aggregate of
764,690  shares of common stock at a weighted  average  exercise price of $11.15
per share.  As a result of the 1998 and 1999  private  placements,  we also have
outstanding  shares of convertible  preferred stock that are convertible into an
aggregate of 645,171 shares of common stock.  The exercise of all of outstanding
warrants  and  options  and/or the  conversion  of the  outstanding  convertible
preferred  stock  would  dilute  the  then-existing   stockholders'   percentage
ownership of the common stock,  and any sales in the public market of the common
stock  issuable  upon  such  exercise  and  conversion  could  adversely  affect
prevailing market prices for the common stock. Moreover, the terms upon which we
would be able to obtain  additional  equity capital could be adversely  affected
because  the holders of such  securities  can be expected to exercise or convert
them at a time when we would,  in all  likelihood,  be able to obtain any needed
capital on terms more favorable to than those provided by such securities.


We Can Give No Assurances That Our Forward Looking Statements Will Be Correct.

         Certain forward-looking statements,  including statements regarding our
expected financial position,  business and financing plans are contained in this
prospectus  or are  incorporated  in  documents  annexed  as  exhibits  to  this
prospectus.  These forward-looking  statements reflect our views with respect to
future events and financial performance. The words, "believe," "expect," "plans"
and "anticipate" and similar expressions  identify  forward-looking  statements.
Although we believe  that the  expectations  reflected  in such  forward-looking
statements are reasonable,  we can give no assurance that such expectations will
prove to have been correct. Important factors that could cause actual results to
differ materially from such  expectations are disclosed in this prospectus.  All
subsequent written and oral  forward-looking  statements  attributable to us are
expressly qualified in their entirety by the cautionary  statements.  We caution
readers not to place undue reliance on these forward-looking  statements,  which
speak only as of their dates.  We undertake no obligations to publicly update or
revise any forward-looking  statements,  whether as a result of new information,
future events or otherwise.


                                      -15-

<PAGE>

ITEM 2.           DESCRIPTION OF PROPERTY

         The Company leases 8,082 square feet of office space in Roslyn Heights,
New York as its  principal  administrative,  sales,  marketing  and research and
development  facility.  The lease relating to such facility  expires in 2004. In
addition,  the Company also leases a sales office on a short-term  basis outside
of London,  England.  The Company  believes  that its  existing  facilities  are
adequate  for its  current  needs  but  anticipates  that  it will  need to seek
additional space in the future. The Company believes that suitable additional or
alternative  space will be  available in the future on  commercially  reasonable
terms as needed.

ITEM 3.           LEGAL PROCEEDINGS

                  Not Applicable.


ITEM 4.           SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

                  Not Applicable.



                                      -16-

<PAGE>

                                     PART II

ITEM 5.           MARKET FOR COMMON EQUITY AND RELATED
                  STOCKHOLDER MATTERS

         The Company's  Common Stock is traded on the OTC Bulletin Board and the
Boston Stock  Exchange.  As described under "Risk Factors That May Affect Future
Results,"  the  Company's  Common  Stock was delisted  from the Nasdaq  SmallCap
Market at the close of trading on May 6,  1999.  The table  below sets forth the
range of closing sale prices of the Common Stock on the Nasdaq  SmallCap  Market
through May 6, 1999 and the closing bid prices of the Common  Stock  thereafter,
on the OTC Bulletin Board.  All prices presented have been restated to reflect a
one-for-three reverse stock split effected in January 2000.


                                                     Common Stock
                                             High                    Low
                                             ----                    ---
Fiscal 1999
First Quarter . . . . . . . . . . . . . . . .$3.75                  $1.41
Second Quarter. . . . . . . . . . . . . .     3.00                   1.50
Third Quarter. . . . . . . . . . . . . . .    2.82                   1.98
Fourth Quarter . . . . . . . . . . . . . .    8.91                   2.28
Fiscal 1998
First Quarter . . . . . . . . . . . . . . . $13.68                  $9.00
Second Quarter. . . . . . . . . . . . . .    16.50                   9.00
Third Quarter. . . . . . . . . . . . . . .   14.07                   3.00
Fourth Quarter. . . . . . . . . . . . . . .   4.89                   1.50


         As of March 22, 2000,  there were 188 record  holders of the  Company's
Common Stock.  The Company  believes that there are in excess of 500  beneficial
owners of its Common Stock.

         The Company has never paid any  dividends  on its Common Stock and does
not  intend  to pay  such  dividends  in the  foreseeable  future.  The  Company
currently  intends to retain any future  earnings for the development and growth
of the Company.

         During the three months ended  December 31, 1999, the Company issued an
aggregate of 297,761 shares of Common Stock pursuant to the conversion of Series
A Convertible Preferred Stock ("Series A Preferred Stock"), Series B Convertible
Preferred Stock ("Series B Preferred Stock") and Series C Convertible  Preferred
Stock  ("Series C Preferred  Stock").  The Company  also issued an  aggregate of
1,310,967 shares of Common stock pursuant to the


                                      -17-

<PAGE>

exercise of warrants  granted in the Series A Private  Placement (as hereinafter
defined),  and the Series B Private  Placement (as  hereinafter  defined).  Such
warrants had an exercise  price of $1.50 per share of Common Stock.  The Company
also issued  968,720 shares of Common Stock pursuant to the exercise of warrants
granted in the Series C Private  Placement.  Such warrants had an exercise price
of $2.5875 per share of Common Stock. The issuance of the shares of Common Stock
upon the  conversion of the Series A, Series B and Series C Preferred  Stock and
the  exercise of the warrants was made  pursuant to the  exemption  contained in
Section 4(2) of the Securities Act of 1933, as amended.



                                      -18-

<PAGE>

ITEM 6.           MANAGEMENT'S DISCUSSION AND ANALYSIS OR
                  PLAN OF OPERATION

         The discussion in this report on Form 10-KSB  contains  forward-looking
statements that involve risks and  uncertainties.  The Company's  actual results
may differ materially from those discussed  herein.  Factors that could cause or
contribute to such differences  include, but are not limited to, those discussed
in the section above entitled  "Risk Factors That May Affect Future  Results" in
Item 1 of this  report as well as those  risks  discussed  in this  section  and
elsewhere in this report.

         The discussion  and analysis  below should be read in conjunction  with
the  Consolidated  Financial  Statements  of the Company  and the Notes  thereto
included elsewhere herein.

Overview

         The  Company  commenced  operations  in February  1989,  and until 1997
substantially  all of its revenues  have been derived  from  providing  contract
services to customers using its proprietary business intelligence technology. In
the third quarter of 1996, the Company shifted its focus to commercializing  its
proprietary  business  intelligence  technology and most of its activities since
then have been  devoted  to  research  and  development,  recruiting  personnel,
raising   capital  and   developing   a  sales  and   marketing   strategy   and
infrastructure. In November 1997, the Company began implementation of full-scale
marketing  activity for QueryObject  System. The Company has a limited operating
history as a software  product  company and has made only  limited  sales of its
QueryObject System.

         To date, the Company has incurred  substantial  losses from operations,
and at December 31, 1999, had an accumulated deficit of $41,338,047. The Company
expects to incur  substantial  operating  expenses  in the future to support its
product development efforts, establish and expand its domestic and international
sales and  marketing  capabilities,  including  recruiting  additional  indirect
channel partners,  and support and expand its technical and management personnel
and organization.

         Revenues  from  the  sales  of the  Company's  products  are  generally
recognized upon the execution of a software licensing  agreement and shipment of
the product,  provided that no  significant  vendor  obligations  remain and the
resulting  receivable is deemed collectible by management.  In instances where a
significant vendor obligation exists, revenue recognition is deferred until such
obligation  has been  satisfied.  Allowances  for estimated  future  returns are
provided for upon shipment.


Results of Operations

         The  following   table  sets  forth  certain  items  in  the  Company's
consolidated  statements of operations for the years ended December 31, 1999 and
1998 ($ in thousands):


                                                    Year Ended December 31,
                                                    1999               1998
                                                    ----               ----
Revenues
         Software licenses........................  $ 1,608          $   518
         Maintenance and services.................      166              111
         Other....................................      ---              300

         Total revenues...........................    1,774              929




                                      -19-

<PAGE>

Cost of revenues
Software licenses................................          94              6
         Maintenance and services................          92             89

Total cost of revenues...........................         186             95

Gross profit.....................................       1,588            834
Operating expenses
         Sales and marketing.....................       3,740          4,321
         Research and development................       2,283          2,306
         General and administrative..............       1,480          1,500

Total operating expenses.........................       7,503          8,127

Loss from operations.............................      (5,915)        (7,293)
  Interest income................................          45            118
  Interest expense...............................         (41)          (135)
  Other (expense) income, net....................         (15)            16
                                                          ---             --

Net loss.........................................     $(5,926)       $(7,294)
                                                      ========       ========


         Revenues

         The  Company's  license  revenues  have been  generated  from  sales of
QueryObject System.  Maintenance revenues consist of ongoing support and product
updates  that are  recognized  ratably over the term of the  contract,  which is
typically   12   months.    Service   revenues   consist   primarily   of   paid
proof-of-concepts performed for customers on a project or contract basis and are
recognized  over the term of the respective  agreements  (See Note 1 of Notes to
the Consolidated Financial  Statements).  The Company has recognized revenue for
all periods  presented in  accordance  with the American  Institute of Certified
Public  Accountants  Statement  of  Position  97-2  entitled  "Software  Revenue
Recognition."

         Total  revenues  increased by $845,000,  or 91%,  from $929,000 for the
year ended December 31, 1998 to $1,744,000 for the year ended December 31, 1999.
License  revenues  increased by  $1,090,000,  or 210%,  from $518,000 in 1998 to
$1,608,000 in 1999. During 1999,  license revenues were derived from the sale of
eighteen licenses, while during 1998 license revenues were derived from the sale
of eight licenses. Maintenance and service revenue increased by $55,000, or 50%,
from $111,000 in 1998 to $166,000 in 1999.  Maintenance  and service  revenue is
expected to increase as the Company sells additional licenses.  During 1998, the
Company  recorded  $300,000  of  non-recurring  other  revenue  relating  to the
Company's  completion of a project for a computer hardware  manufacturer whereby
the QueryObject System was engineered to run on their platforms.


         Cost of Revenues

         Cost of software  license  revenues  consists  primarily of  royalties,
product packaging,  documentation and production costs. Cost of software license
revenues  increased as a percentage  of software  license  revenues from 1.1% in
1998 to 5.8 % in 1999,  primarily due to royalty  payments made to third parties
during 1999.  Cost of maintenance  and services  revenues  consist  primarily of
customer  support  costs  and  direct  costs  associated  with  proof-of-concept
services. Cost of maintenance and services revenues decreased as a percentage of
services and maintenance revenues from 80% in 1998 to 56% in 1999, primarily due
to higher revenues that did not require significant  additional  personnel costs
related to customer support.


                                      -20-

<PAGE>

         Operating Expenses

         Sales and Marketing.  Sales and marketing expenses consist primarily of
personnel costs,  including sales  commissions and incentives,  of all personnel
involved  in the sales and  marketing  process,  as well as  related  recruiting
costs,  public relations,  advertising  related costs,  collateral  material and
trade shows. Sales and marketing  expenses  decreased by $581,000,  or 13%, from
$4,321,000  in 1998 to $3,740,000  in 1999,  primarily due to reduced  personnel
related costs,  including travel and entertainment expenses and recruiting fees,
offset in part by higher consulting expense. The Company believes that its sales
and  marketing  expenses  will  increase  in  absolute  dollars  as the  Company
continues to increase promotion and other marketing expenses.

         Research and  Development.  Research and development  expenses  consist
primarily of salaries and other personnel  related  expenses,  recruiting  costs
associated  with  the  hiring  of  additional  software  engineers  and  quality
assurance personnel, consultant costs and depreciation of development equipment.
Research and development  expenses decreased by $23,000,  or 1%, from $2,306,000
in 1998 to $2,283,000 in 1999, primarily due to an increase in personnel related
costs  and  depreciation,  offset in part by  reduced  recruiting  expense.  The
Company believes that a significant level of investment for product research and
development  is required to remain  competitive  and,  accordingly,  the Company
anticipates  that it will  continue to devote  substantial  resources to product
research and development and that these costs will increase in absolute dollars.
To date, all research and development costs have been expensed as incurred.

         General and Administrative. General and administrative expenses consist
primarily  of personnel  costs for finance,  MIS,  human  resources  and general
management,  as  well  as  insurance  and  professional  expenses.  General  and
administrative  expenses decreased by $20,000, or 1%, from $1,500,000 in 1998 to
$1,480,000  in 1999,  primarily due to higher  consulting  and bad debt expense,
that was fully  offset by a reduction in personnel  related  costs.  The Company
believes that its general and administrative  expenses will increase in absolute
dollars as it incurs additional administrative costs.

         Interest Income and Interest Expense

         Interest income represents income earned on the Company's cash and cash
equivalents. Interest income decreased by $73,000, or 62%, from $118,000 in 1998
to $45,000 in 1999,  primarily due to a lower level of cash and cash equivalents
on deposit during 1999.

         Interest expense  generally  represents  interest on capital  equipment
leases,  and for 1998,  charges relating to the H.C.C.  Financial  Services Loan
Agreement (the "Loan Agreement"). Interest expense decreased by $94,000, or 70%,
from  $135,000 in 1998 to $41,000 in 1999.  This  decrease was  primarily due to
payments made to reduce the outstanding  balance under the Loan Agreement during
1998.  The remaining  balance under the Loan Agreement was repaid in full during
October 1998.


         Provision for Income Taxes

         The Company  accounts for income taxes in accordance  with Statement of
Financial  Accounting  Standards  No. 109,  "Accounting  for Income  Taxes." The
Company incurred net operating losses in 1999 and 1998 and consequently  paid no
federal or state  income  taxes.  At  December  31,  1999,  the  Company had net
operating  losses and  research and  experimental  tax credit  carryforwards  of
$37,705,000  and  $259,000,  respectively,  available to offset  future  federal
taxable income and tax. These net operating loss carryforwards expire at various
dates through 2019.  Although the  determination  of whether an ownership change
has occurred is subject to factual and legal uncertainties, the Company believes
that an ownership change occurred upon the completion of previous financings and
such "ownership  change" will materially limit the Company's  ability to utilize
its NOL carryforward.  Moreover,  while such loss carryforwards are available to
offset  future  taxable  income of the  Company,  the Company does not expect to
generate sufficient taxable income so as to utilize all or a substantial portion
of such loss carryforwards prior to their expiration.


                                      -21-

<PAGE>

         Liquidity and Capital Resources

         Since January 1, 1998, the Company has consummated  several  financings
to fund operations as follows:

         (a) During June,  July and August 1999,  the Company sold 45 Units (the
"Units") of Series C Preferred  Stock totaling gross proceeds of $4,500,000 in a
private  placement  (the "Series C Private  Placement").  The purchase price per
Unit was $100,000.  Each Unit consisted of 100 shares of newly-created  Series C
Convertible  Preferred  Stock  ("Series C Preferred  Stock") and a Common  Stock
Purchase Warrant (the "Series C Warrants")  exercisable  until December 28, 2001
to purchase  33,333  shares of Common Stock at an exercise  price of $2.5875 per
share.  As  described  below,  the  Series  C  Warrants  have  been  called  for
redemption.  The Company  received net proceeds of  $4,089,791  and issued 4,500
shares of Series C Preferred Stock,  convertible into and aggregate of 1,739,133
shares of Common  Stock,  and granted  Series C Warrants  to purchase  1,500,000
shares of Common  Stock.  As of December  31,  1999,  there were 3,855 shares of
Series C Preferred Stock issued and outstanding.

         The Company  granted the placement agent and the selected dealer in the
Series C Private Placement options to purchase an aggregate of 146,667 shares of
Common Stock and paid commissions and  non-accountable  expense allowances equal
to 7.1% of the gross proceeds received by the Company.

         (b)  During May and June  1999,  the  Company  borrowed  $400,000  from
stockholders  of the Company in exchange for  promissory  notes (the "1999 Notes
Payable"). The 1999 Notes Payable bore interest at 12% per annum and were due at
the  earlier of June 30,  1999 or the  successful  consummation  of the Series C
Private Placement. Upon the initial closing of the Series C Private Placement on
June 28, 1999, the 1999 Notes Payable were repaid.

         (c) In October and November 1998,  the Company had the initial  closing
of two private  placements  -- the Series A Private  Placement  and the Series B
Private Placement.  The Series A Private Placement  consisted of 1,750,000 Units
(the  "Series A Units")  with a gross  sales price of  $3,500,000.  The Series B
Private  Placement  consisted  of 10 Units (the  "Series B Units")  with a gross
sales price of $1,000,000. Each Series A Unit consisted of one share of Series A
Convertible  Preferred  Stock  ("Series  A  Preferred  Stock")  and a warrant to
purchase .83 of a share of Common Stock at a per share  exercise  price equal to
$1.50.  Each Series B Unit  consisted of 10,000  shares of Series B  Convertible
Preferred  Stock  ("Series B  Preferred  Stock")  and  warrants  to  purchase an
aggregate of 41,666 shares of Common Stock at a per share  exercise  price equal
to $1.50. The Series A Units were sold at a purchase price of $2.00 per Unit and
each share of Series A Preferred Stock share is convertible into 1.333 shares of
Common Stock.  The Series B Units were sold at a purchase  price of $100,000 per
Unit and each share of Series B Preferred Stock is convertible into 6.666 shares
of Common Stock.  The effective  purchase  price,  on a Common Stock  equivalent
basis was $1.50 per common  share,  which  represented  a discount from the fair
market value of the Company's Common Stock on the various dates of issuance. The
Company  consummated the final closing on each of the Series A Private Placement
and the Series B Private Placement in February 1999 and received an aggregate of
(1)  $3,181,000  from  the  Series  A  Private  Placement  (after  deduction  of
commissions and expenses  payable to the placement agent) and (ii) $814,000 from
the Series B Private  Placement  (after  deduction of  commissions  and expenses
payable to the placement agent).

         In  connection  with the Series A and Series B Private  Placements  the
placement agent was granted an option to purchase additional Series A and Series
B Units  equal to 10% of the  Series A and  Series B Units  sold and  received a
commission  and  non-accountable  expense  allowance  equal  to  5.6%  and  9.3%
respectively, of the gross proceeds received by the Company.

         For a discussion of the terms of the securities issued in the Series A,
Series  B and  Series  C  Private  Placements  see  Note 7 to the  Notes  to the
Consolidated Financial Statements.



                                      -22-

<PAGE>
         (d) In  September  and October  1998,  the Company  borrowed a total of
$490,000 from  stockholders of the Company in exchange for unsecured  promissory
notes (the "1998 Notes  Payable").  The 1998 Notes  Payable bore interest at 12%
per  annum  and  were  due  at the  earlier  of  March  2000  or the  successful
consummation  of the Series A and Series B Private  Placement.  Upon the initial
closing of the Series A Private Placement in October 1998,  $20,000 of such 1998
Notes Payable were converted into Series A Units and $170,000 of such 1998 Notes
Payable were repaid through December 1998. The balance of $300,000,  outstanding
at December 31, 1998, was repaid in full in January 1999.

         In  December  1999,  all  Series A, B and C  Warrants  were  called for
redemption. Certain Series A, B and C Warrants were exercised during 1999, prior
to the call for  redemption.  For the year ended December 31, 1999, the exercise
of Series A, B and C Warrants  resulted in the issuance of  2,767,573  shares of
Common Stock with proceeds to the Company of  $5,213,908.  All Series A, B and C
Warrants were exercised and as a result, were not redeemed. In January 2000, the
exercise of the remaining Series A, B and C Warrants resulted in the issuance of
591,697 shares of Common Stock with proceeds to the Company of $1,456,250.

         For the year ended  December 31, 1999, the holders of Series A, B and C
Preferred  Stock elected to convert a total of 131,895 shares of preferred stock
into 475,061  shares of Common  Stock.  As of December 31, 1999,  the  remaining
outstanding  Preferred  Stock was  convertible  into 4,239,021  shares of Common
Stock, of which substantially all were converted into Common Stock in 2000.

         As of December 31, 1999,  the Company had  $4,488,854  in cash and cash
equivalents and working capital of $4,600,178. During 1999, the Company received
$1,397,004  in  working  capital  from the  proceeds  of the  Series  A  Private
Placement  and Series B Private  Placement,  $4,089,791  from the closing of the
Series C Private  Placement and $5,213,906 from the exercise of warrants granted
in the Series A, B and C Private Placements.  The Company has incurred operating
losses  since  inception,  has  incurred  negative  cash  flows  from  operating
activities and had an accumulated  deficit of $41,338,047  and $35,412,456 as of
December  31,  1999  and  1998,  respectively.  The  Company  has had a  limited
operating  history as a software  product  company and has not made  significant
sales of its products. Therefore, revenues are difficult to predict. The Company
anticipates that its cash and cash equivalent  balances,  may be insufficient to
satisfy its operating cash flow requirements in the foreseeable  future. In this
event, there can be no assurances that the Company will be successful in raising
additional  funds.  See "Risk Factors That May Affect Future  Results"  included
elsewhere  herein.  The sale of  additional  equity  securities  will  result in
additional dilution to the Company's stockholders.

         Net cash used in operating  activities was $6,423,000 and $7,089,000 in
1999 and 1998, respectively. For 1999, net cash used in operating activities was
primarily  attributable  to a net loss of $5,926,000 and an increase in accounts
receivable of $955,000,  less  depreciation  and  amortization of $438,000.  For
1998, net cash used in operating activities was primarily  attributable to a net
loss of  $7,294,000,  less  depreciation  and  amortization  of  $421,000  and a
decrease in accounts  receivable  of  $223,000.  Net cash  provided by financing
activities  was  $10,319,000  and  $2,727,000  in 1999 and  1998,  respectively,
primarily  as a result  of the  Series  A, B and C  Private  Placements  and the
exercise of common stock purchase  warrants in 1999.  Subsequent to December 31,
1999,  the  Company  received an  additional  $1,456,000  in  proceeds  from the
exercise of common stock purchase  warrants.  The Company believes that its cash
and cash  equivalent  balance  will be  insufficient  to  satisfy  its cash flow
requirements  for more than 12 months  since the Company is unable to predict if
it will have  sufficient  revenues to enable it to continue  operations  without
additional financing.

         The Company does not currently  have a line of credit with a commercial
bank. As of December 31, 1999, the Company's principal  commitments consisted of
obligations  under  operating and capital leases and employment  agreements.  At
that date,  the Company had  approximately  $171,000 in  outstanding  borrowings
under  capital  leases which are payable  through  2001.  Pursuant to employment
agreements  with executive  officers of the Company as of December 31, 1999, the
Company's obligation is to pay $390,000 in salaries for the years ended December
31, 2000 and 2001.


                                      -23-

<PAGE>

Year 2000 Compliance

         We have not  suffered  any  significant  Year  2000  problems  with our
internal  systems or with our  third-party  vendors  and  licensors  of material
software and  services.  We  completed  our  assessment  and system tests of all
current  versions of hardware and software  products and technology  information
systems that we use and believe that they are Year 2000 compliant.  However,  we
continue  to  monitor  our Year  2000  implications.  We have not  incurred  any
material costs in identifying or evaluating Year 2000 compliance issues.


ITEM 7.           FINANCIAL STATEMENTS

                  See Index to Financial Statements.

ITEM 8.           CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                  ACCOUNTING AND FINANCIAL DISCLOSURE

                  None.


                                      -24-

<PAGE>
                                    PART III

ITEM 9.           DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
                  AND CONTROL PERSONS; COMPLIANCE WITH
                  SECTION 16(a) OF THE EXCHANGE ACT.

                  The  information  required  by this  item is  incorporated  by
reference from the Company's  definitive  proxy  statement to be filed not later
than  April  29,  2000  pursuant  to  Regulation  14A of the  General  Rules and
Regulations under the Securities Exchange Act of 1934 ("Regulation 14A").


ITEM 10.          EXECUTIVE COMPENSATION.

                  The  information  required  by this  item is  incorporated  by
reference from the Company's  definitive  proxy  statement to be filed not later
than April 29, 2000 pursuant to Regulation 14A.


ITEM 11.          SECURITY OWNERSHIP OF CERTAIN
                  BENEFICIAL OWNERS AND MANAGEMENT.

                  The  information  required  by this  item is  incorporated  by
reference from the Company's  definitive  proxy  statement to be filed not later
than April 29, 2000 pursuant to Regulation 14A.

ITEM 12.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

                  The  information  required  by this  item is  incorporated  by
reference from the Company's  definitive  proxy  statement to be filed not later
than April 29, 2000 pursuant to Regulation 14A.


ITEM 13.          EXHIBITS AND REPORTS ON FORM 8-K.

(a)               Exhibits


Exhibit
Number              Exhibits
 3.1                Certificate of Incorporation of the Company (Incorporated by
                    reference  to Exhibit 3.1 to the  Registration  Statement on
                    Form SB-2, No. 333-34667).
3.2                 By-laws  of the  Registrant,  as  amended  (Incorporated  by
                    reference  to Exhibit 3.2 to the  Registration  Statement on
                    Form SB-2, No. 333-34667).
*3.3                Certificate of Amendment to the Certificate of Incorporation
                    of the Company
4.1                 Specimen   Certificate  of  the  Registrant's  Common  Stock
                    (Incorporated   by   reference   to   Exhibit   4.1  to  the
                    Registration Statement on Form SB-2, No. 333-34667).
4.2                 Form of  Representative's  Purchase  Option  granted  to GKN
                    Securities  Corp.  (Incorporated by reference to Exhibit 4.2
                    to the Registration Statement on Form SB-2, No. 333-34667).
4.3                 Form of  Warrant  issued  in  connection  with the July 1997
                    Private Placement  (Incorporated by reference to Exhibit 4.3
                    to the Registration Statement on Form SB-2, No. 333-34667).



                                      -25-

<PAGE>

Exhibit
Number              Exhibits
4.4                 Certificate of  Designations,  Preferences  and Other Rights
                    and  Qualifications of Series A Convertible  Preferred Stock
                    (Incorporated  by  reference  to  Exhibit  99(A) of the Form
                    10-QSB for the quarterly period ended September 30, 1998)
4.5                 Certificate   of   Correction   to   the    Certificate   of
                    Designations,    Preferences    and   Other    Rights    and
                    Qualifications  of  Series  A  Convertible  Preferred  Stock
                    (Incorporated  by  reference  to  Exhibit  99(B) to the Form
                    10-QSB for the quarterly period ended September 30, 1998).
4.6                 Certificate of  Designations,  Preferences  and Other Rights
                    and  Qualifications of Series B Convertible  Preferred Stock
                    (Incorporated  by  reference  to  Exhibit  99(C) to the Form
                    10-QSB for the quarterly period ended September 30, 1998).
4.7                 Certificate of  Designations,  Preferences  and Other Rights
                    and  Qualifications of Series C Convertible  Preferred Stock
                    (Incorporated   by   reference   to  Exhibit   4.12  to  the
                    Registration Statement on Form S-3, No. 333-88319).
10.1                1991 Incentive Stock Option Plan  (Incorporated by reference
                    to Exhibit 10.1 to the Registration  Statement on Form SB-2,
                    No. 333-34667).
10.2                Form of Stock Option  Agreement  for  Non-Qualified  Options
                    granted to Advisors  (Incorporated  by  reference to Exhibit
                    10.2  to  the  Registration  Statement  on  Form  SB-2,  No.
                    333-34667).
10.3                Employment  Agreement,  dated as of January 1, 1999,  by and
                    among,  the  Company  and  Daniel M. Pess  (Incorporated  by
                    reference  to  Exhibit  99.2  to the  form  10-QSB  for  the
                    quarterly period ended September 30, 1999).
10.4                Employment  Agreement,  dated as of January 1, 1999,  by and
                    among,  the Company and Robert A. Thompson  (Incorporated by
                    reference  to  Exhibit  99.1  to the  form  10-QSB  for  the
                    quarterly period ended September 30, 1999).
10.5                Employment  Agreement,  dated as of October 14, 1997, by and
                    among,  the Company  and Alan W.  Kaufman  (Incorporated  by
                    reference to Exhibit 10.9(a) to the  Registration  Statement
                    on Form SB-2, No. 333-34667).
10.6                Amendment to  Employment  Agreement,  dated as of January 9,
                    1999,  by  and  among,  the  Company  and  Alan  W.  Kaufman
                    (Incorporated  by  reference  to  Exhibit  10.6 to the  Form
                    10-KSB for the fiscal year ended December 31, 1998).
*10.7               Software License Agreement dated as of March 16, 2000 by and
                    between the Company and internetQueryObject Corporation.
10.8                Agreement of Lease, dated as of August 13, 1999, between LKM
                    Expressway   Plaza  Limited   Partnership  and  the  Company
                    (Incorporated  by  reference  to  Exhibit  99.4 to the  Form
                    10-QSB for the quarterly period ended September 30, 1999).
*11.1               Computation of Net Loss Per Share.
*23                 Consent of PricewaterhouseCoopers LLP
*27                 Financial Data Schedule

-------------------------
*        Filed herewith.
(b)      Reports on Form 8-K
         None.



                                      -26-

<PAGE>
         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                           QueryObject Systems Corporation


Dated: March 29, 2000         By: /s/ Robert Thompson
                                  ----------------------------------------------
                                 Robert Thompson
                                 Chairman, President and Chief Executive Officer

                                POWER OF ATTORNEY

         QueryObject  Systems  Corporation and each of the undersigned do hereby
appoint Robert  Thompson and Daniel M. Pess and each of them  severally,  its or
his true and  lawful  attorney  to  execute  on  behalf of  QueryObject  Systems
Corporation  and the undersigned any and all amendments to this Annual Report on
Form 10-KSB and to file the same with all exhibits  thereto and other  documents
in connection  therewith,  with the Securities and Exchange Commission;  each of
such attorneys shall have the power to act hereunder with or without the other.

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
Registrant and in the capacities and on the dates indicated:


       Signature                        Title                          Date

/s/ Robert Thompson
-----------------------    Chairman, President and Chief          March 29, 2000
Robert Thompson            Executive Officer (Principal
                           Executive Officer)

/s/ Daniel M. Pess
-----------------------    Executive Vice President, Chief        March 29, 2000
Daniel M. Pess             Operating Officer and Chief
                           Financial Officer (Principal
                           Financial Officer and Principal
                           Accounting Officer)

/s/ Alan W. Kaufman        Director                               March 29, 2000
-----------------------
Alan W. Kaufman

/s/ Andre Szykier
-----------------------    Director                               March 29, 2000
Andre Szykier

/s/ Rino Bergonzi          Director                               March 29, 2000
-----------------------
Rino Bergonzi

/s/ Irwin Jacobs           Director                               March 29, 2000
-----------------------
Irwin Jacobs

/s/ Amy L. Newmark         Director                               March 29, 2000
-----------------------
Amy L. Newmark



                                      -27-

<PAGE>

                        QueryObject Systems Corporation
                       Consolidated Financial Statements
                           December 31, 1999 and 1998



<PAGE>

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>

                                                                                            Page

<S>                                                                                          <C>
Report of Independent Accountants............................................................F-2
Consolidated Balance Sheet as of December 31, 1999...........................................F-3
Consolidated Statement of Operations for the years ended December 31, 1999 and 1998..........F-4
Consolidated Statement of Changes in Stockholders' Equity (Deficit) for the years ended
  December 31, 1999 and 1998.................................................................F-5
Consolidated Statement of Cash Flows for the years ended December 31, 1999 and 1998..........F-6
Notes to the Consolidated Financial Statements...............................................F-7
</TABLE>




                                       F-1

<PAGE>

                        Report of Independent Accountants

To the Board of Directors
and Stockholders of
QueryObject Systems Corporation

In our opinion,  the  accompanying  consolidated  balance  sheet and the related
consolidated  statements  of  operations,  of  changes in  stockholders'  equity
(deficit)  and of cash flows  present  fairly,  in all  material  respects,  the
financial  position  of  QueryObject  Systems  Corporation  (the  "Company")  at
December 31, 1999,  and the results of its operations and its cash flows for the
two years then ended in conformity with accounting principles generally accepted
in the United States.  These financial  statements are the responsibility of the
Company's  management;  our  responsibility  is to  express  an opinion on these
financial  statements  based on our  audits.  We  conducted  our audits of these
statements  in  accordance  with auditing  standards  generally  accepted in the
United  States  which  require  that we plan and  perform  the  audit to  obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the  amounts  and  disclosures  in  the  financial  statements,   assessing  the
accounting  principles  used and significant  estimates made by management,  and
evaluating the overall  financial  statement  presentation.  We believe that our
audits provide a reasonable basis for the opinion expressed above.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
consolidated  financial  statements,  the Company has suffered  recurring losses
from operations and has incurred  negative cash flows from operating  activities
that raise  substantial  doubt about its ability to continue as a going concern.
Management's  plans in regard to these matters are also described in Note 2. The
consolidated  financial  statements  do not include any  adjustments  that might
result from the outcome of this uncertainty.



PricewaterhouseCoopers LLP
Melville, New York
March 2, 2000


                                       F-2


<PAGE>
QueryObject Systems Corporation

Consolidated Balance Sheet
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                               December 31,
                                                                                   1999
ASSETS
Current assets
<S>                                                                           <C>
     Cash and cash equivalents                                                $  4,488,854
     Accounts receivable, net of allowance for doubtful
         accounts of $92,700                                                     1,231,548
     Prepaid expenses and other current assets                                     148,234
                                                                              ------------

             Total current assets                                                5,868,636

Property and equipment, net                                                        846,300
Deposits and other assets                                                          157,047
                                                                              ------------

             Total assets                                                     $  6,871,983
                                                                              ------------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
     Accounts payable                                                         $    347,680
     Accrued expenses                                                              564,217
     Capital lease obligations due within one year                                 161,374
     Deferred revenue                                                              169,755
     Deferred rent                                                                  25,432
                                                                              ------------

             Total current liabilities                                           1,268,458

Capital lease obligations                                                            9,817
Deferred rent                                                                      266,861
                                                                              ------------

             Total liabilities                                                   1,545,136
                                                                              ------------

Stockholders' equity
     Preferred stock, $.001 par value: 4,000,000 shares
          authorized; 1,609,375, 90,500 and 3,855
          shares of Series A, B and C, respectively, issued and outstanding          1,704
     Common stock, $.003 par value: 60,000,000 shares
         authorized; 4,983,663 shares issued and outstanding                        14,951
     Additional paid-in-capital                                                 46,648,239
     Accumulated deficit                                                       (41,338,047)
                                                                              ------------

             Total stockholders' equity                                          5,326,847
                                                                              ------------

Commitments and contingencies (Notes 2 and 13)

             Total liabilities and stockholders' equity                       $  6,871,983
                                                                              ------------
</TABLE>


The  accompanying  notes are an integral  part of these  consolidated  financial
statements.


                                      F-3
<PAGE>

QueryObject Systems Corporation


Consolidated Statement of Operations
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                            Year Ended December 31,
                                                                              1999           1998

Revenues
<S>                                                                      <C>            <C>
     Software licenses                                                   $ 1,608,400    $   517,350
     Maintenance and services                                                165,709        111,155
     Other                                                                      --          300,000
                                                                         -----------    -----------

             Total revenues                                                1,774,109        928,505

Cost of revenues
     Software licenses                                                        93,637          5,668
     Maintenance and services                                                 92,488         88,756
                                                                         -----------    -----------

             Total cost of revenues                                          186,125         94,424
                                                                         -----------    -----------

Gross profit                                                               1,587,984        834,081
                                                                         -----------    -----------

Operating expenses
     Sales and marketing                                                   3,740,385      4,321,359
     Research and development                                              2,282,910      2,305,678
     General and administrative                                            1,479,823      1,500,506
                                                                         -----------    -----------

             Total operating expenses                                      7,503,118      8,127,543
                                                                         -----------    -----------

Loss from operations                                                      (5,915,134)    (7,293,462)

Interest income                                                               45,315        118,423
Interest expense                                                             (41,121)      (135,498)
Other (expense) income, net                                                  (14,651)        16,505
                                                                         -----------    -----------

Net loss                                                                 $(5,925,591)   $(7,294,032)
                                                                         -----------    -----------

Calculation of net loss available to common stockholders

Net loss                                                                 $(5,925,591)   $(7,294,032)
Effect of beneficial conversion feature of convertible preferred stock          --       (2,251,438)
                                                                         -----------    -----------

Net loss available to common stockholders                                $(5,925,591)   $(9,545,470)

Basic and diluted net loss per common share                              $     (2.57)   $     (5.59)
                                                                         -----------    -----------

Weighted average shares used in per share computation (Note 1)             2,302,641      1,706,735
                                                                         -----------    -----------
</TABLE>


The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

                                      F-4
<PAGE>

QueryObject Systems Corporation

Consolidated Statement of Changes in Stockholders' Equity (Deficit)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                      Series A Convertible    Series B Convertible             Series C Convertible
                                                        Preferred Stock         Preferred Stock                  Preferred Stock
                                                      ------------------------------------------------------------------------------
                                                      Shares        Amount      Shares         Amount         Shares        Amountt
                                                                                      ---------------------------------------------

<S>                                                <C>          <C>              <C>        <C>              <C>        <C>
Balance at January 1, 1998                              --      $       --          --      $       --          --      $       --

Issuance of Series A & B preferred stock:
    For cash and notes, net of issuance costs      1,721,125           1,721     100,000             100
    In settlement of bridge notes payable             10,000              10
Beneficial conversion feature of convertible
    Series A and B preferred stock
Issuance of common stock options for
    consulting services
Receipt of receivable from stockholder
Common stock options exercised
Net loss
                                                ------------    ------------  ----------    ------------  ----------    ------------

Balance at December 31, 1998                       1,731,125           1,731     100,000             100        --              --

Issuance of Series C preferred stock, net                                                                      4,500             5
Conversion of preferred stock to common stock       (121,750)           (122)     (9,500)             (9)       (645)           (1)
Common stock warrants exercised
Issuance of common stock options for
    consulting services
Receipt of receivable from stockholders
Common stock options exercised
Net loss
                                                ------------    ------------  ----------    ------------  ----------    ------------

Balance at December 31, 1999                       1,609,375    $      1,609      90,500    $         91       3,855    $        4
                                                ------------    ------------  ----------    ------------  ----------    ------------
</TABLE>

<TABLE>
<CAPTION>


                                                    Common Stock         Additional                       Stock            Total
                                             -----------------------       Paid-in     Accumulated   Subscriptions   Stockholders'
                                                Shares        Amount       Capital        Deficit      Receivable   Equity (Deficit)
                                             ---------------------------------------------------------------------------------------

<S>                                              <C>         <C>            <C>           <C>           <C>             <C>
Balance at January 1, 1998                       1,703,535   $      5,111   $ 30,384,706  $(25,866,986) $    (12,300)   $  4,510,531

Issuance of Series A & B preferred stock:
    For cash and notes, net of issuance costs                                  4,096,777                  (1,519,200)      2,579,398
    In settlement of bridge notes payable                                         19,990                                      20,000
Beneficial conversion feature of convertible
    Series A and B preferred stock                                             2,251,438    (2,251,438)                          --
Issuance of common stock options for
    consulting services                                                          145,792                                     145,792
Receipt of receivable from stockholder                                                                        12,300          12,300
Common stock options exercised                       4,127              12        11,873                                      11,885
Net loss                                                                                    (7,294,032)                  (7,294,032)
                                                ----------   ------------   ------------  ------------  ------------    ------------

Balance at December 31, 1998                     1,707,662           5,123   $36,910,576  $(35,412,456) $ (1,519,200)  $    (14,126)

Issuance of Series C preferred stock, net                                      4,089,786                                   4,089,791
Conversion of preferred stock to common stock      475,095           1,425        (1,293)                                         --
Common stock warrants exercised                  2,767,573           8,303     5,205,605                                   5,213,908
Issuance of common stock options for
    consulting services                                                          471,861                                     471,861
Receipt of receivable from stockholders                                         (122,196)                  1,519,200       1,397,004
Common stock options exercised                      33,333             100        93,900                                      94,000
Net loss                                                                                    (5,925,591)                  (5,925,591)
                                                ----------   ------------   ------------  ------------  ------------    ------------

Balance at December 31, 1999                     4,983,663   $     14,951   $ 46,648,239  $(41,338,047) $       --      $  5,326,847
                                                ----------   ------------   ------------  ------------  ------------    ------------
</TABLE>


The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

                                      F-5
<PAGE>

QueryObject Systems Corporation

Consolidated Statement of Cash Flows
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                  Year Ended December 31,
                                                                   1999             1998

Cash flows from operating activities
<S>                                                          <C>             <C>
     Net loss                                                $ (5,925,591)   $ (7,294,032)
     Adjustments to reconcile net loss to net cash used in
        operating activities
            Depreciation and amortization                         438,806         420,820
            Loss on disposition of equipment                        1,312            --
            Options issued for consulting services                471,861         145,792
            Changes in assets and liabilities
                Accounts receivable, net                         (955,021)        223,240
                Prepaid expenses and other current assets        (110,483)         10,503
                Deposits and other assets                         (76,015)          4,243
                Accounts payable and accrued expenses            (374,879)       (355,338)
                Deferred rent                                      22,465             896
                Deferred revenue                                   84,964          54,756
                Customer advance                                     --          (300,000)
                                                             ------------    ------------

                Net cash used in operating activities          (6,422,581)     (7,089,120)
                                                             ------------    ------------

Cash flows from investing activities
     Acquisitions of property and equipment                      (328,130)       (132,795)
     Repayment of stockholder note receivable                      65,000            --
     Proceeds from disposition of equipment, net                    1,948            --
     Note receivable from stockholder                                --           (65,000)
     Purchase of restricted certificate of deposit                   --           (23,201)
                                                             ------------    ------------

                Net cash used in investing activities            (261,182)       (220,996)
                                                             ------------    ------------

Cash flows from financing activities
     Proceeds from issuance of preferred stock, net             4,089,791       2,579,398
     Proceeds from exercise of common stock warrants            5,213,908            --
     Proceeds from exercise of common stock, options               94,000          11,885
     Collection of stock subscriptions receivable, net          1,397,004            --
     Proceeds from interim financings payable                        --           490,000
     Repayment of loans payable to stockholders                  (700,000)       (170,000)
     Proceeds from loan payable to stockholders                   400,000        (891,335)
     Proceeds from loan receivable from stockholder                  --            12,300
     Payments of capital lease obligations                       (176,104)       (235,706)
     Proceeds from sale-leaseback transaction                        --            29,202
     Release of restricted certificate of deposit                    --           901,040
                                                             ------------    ------------

                Net cash provided by financing activities      10,318,599       2,726,784
                                                             ------------    ------------

Net increase (decrease) in cash and cash equivalents            3,634,836      (4,583,332)

Cash and cash equivalents at beginning of year                    854,018       5,437,350
                                                             ------------    ------------

Cash and cash equivalents at end of year                     $  4,488,854    $    854,018
                                                             ------------    ------------
</TABLE>


                                      F-6
<PAGE>

QueryObject Systems Corporation

Notes to the Consolidated Financial Statements
--------------------------------------------------------------------------------

1.       Organization and Summary of Significant Accounting Policies

         Organization
         QueryObject   Systems   Corporation   (the  "Company")  was  originally
         incorporated in California in February 1989. In November 1997, pursuant
         to a plan of  corporate  reorganization,  the  Company  merged with its
         wholly owned Delaware  subsidiary.  The Company  develops,  markets and
         supports  proprietary  business  intelligence  software  solutions that
         enable  business  managers to make strategic  decisions  based on their
         corporate data.

         Summary of significant accounting policies

         Basis of presentation
         The  consolidated   financial   statements   include  the  accounts  of
         QueryObject  Systems  Corporation  and its wholly  owned  subsidiaries,
         internetQueryObject  Corporation  ("IQO.com") and  QueryObject  Systems
         Corporation,  Ltd. All significant intercompany  transactions have been
         eliminated in consolidation.

         Restatement and reclassification for reverse stock split
         On  January  27,   2000,   the   Company's   stockholders   approved  a
         one-for-three reverse stock split of all common stock outstanding.  The
         one-for-three  reverse  stock split also  affects  options and warrants
         outstanding  as well as the conversion  ratio of Convertible  Preferred
         Stock into common stock. All share and per share amounts  affecting net
         loss per share, weighted average number of common and common equivalent
         shares  outstanding,  common  stock  and all other  stock  transactions
         presented in these  financial  statements have been restated to reflect
         the one-for-three reverse stock split.

         Basic and diluted net loss per share
         Basic net loss per share is computed  by  dividing  the net loss by the
         sum  of  the  weighted   average  number  of  shares  of  common  stock
         outstanding.  The  weighted  average  number of shares of common  stock
         outstanding  includes  the number of common  shares  issuable  upon the
         conversion  of  Convertible   Preferred   Stock,  as  of  the  date  of
         conversion,  and the number of common shares issuable upon the exercise
         of options and warrants, as of the date of exercise.

         Diluted  earnings  per share is based on the  potential  dilution  that
         would occur on exercise or conversion of securities  into common stock.
         At December  31,  1999 and 1998,  outstanding  options and  warrants to
         purchase 3,406,390 and 4,011,201 shares of common stock,  respectively,
         that could  potentially  dilute basic  earnings per share in the future
         were not  included  in the  computation  of diluted  net loss per share
         because to do so would have had an antidilutive  effect for the periods
         presented.  In addition,  the Series A, B and C  Convertible  Preferred
         Stock  issued  during  1999  and  1998  has  been  excluded  due to the
         antidilutive  effect.  As a result,  the basic  and  diluted  per share
         amounts are identical for all periods presented.

         Cash and cash equivalents
         The Company  considers  all highly  liquid  investments  with  original
         maturities of three months or less to be cash equivalents.

                                      F-7
<PAGE>

         Revenue recognition
         The  Company   recognizes  revenue  in  accordance  with  the  American
         Institute  of  Certified  Public  Accountants  ("AICPA")  Statement  of
         Position  97-2 on Software  Revenue  Recognition.  Revenue from product
         licensing  is  generally  recognized  after  execution  of a  licensing
         agreement  and shipment of the product,  provided  that no  significant
         vendor  obligations  remain  and the  resulting  receivable  is  deemed
         collectable  by  management.  Maintenance  revenues  consist of ongoing
         support and product updates and are recognized ratably over the term of
         the  contract,   generally  twelve  months.  Service  revenues  consist
         primarily  of  paid  proof-of-concepts  performed  for  customers  on a
         project  or  contract  basis  and are  recognized  over the term of the
         respective agreements.

         Depreciation and amortization
         Depreciation  and  amortization  are computed  using the straight  line
         method over the estimated  useful lives of the assets,  generally three
         to five years.  Assets  acquired  under  capital  leases and  leasehold
         improvements  are  amortized  using the  straight-line  method over the
         shorter of the estimated useful lives of the assets or the terms of the
         related leases.

         Software development costs
         Statement of Financial  Accounting Standards No. 86 "Accounting for the
         Costs of Computer  Software to be Sold,  Leased or Otherwise  Marketed"
         ("SFAS 86") requires the capitalization of certain software development
         costs once technological feasibility is established,  which the Company
         defines  as the  completion  of a working  model.  To date,  the period
         between   achieving   technological   feasibility   and   the   general
         availability  of such software has been short and software  development
         costs   qualifying   for   capitalization   have  been   insignificant.
         Accordingly, the Company has expensed all software development costs as
         incurred.

         Advertising
         Advertising costs are included in sales and marketing  expenses and are
         expensed  as  incurred.   To  date  advertising  costs  have  not  been
         significant.

         Income taxes
         The Company  provides for income taxes in accordance  with Statement of
         Financial  Accounting  Standards No. 109, "Accounting for Income Taxes"
         ("SFAS 109").  Income taxes are computed  using the asset and liability
         method.  Under the asset and  liability  method  specified by SFAS 109,
         deferred income tax assets and liabilities are determined  based on the
         differences between the financial reporting and tax bases of assets and
         liabilities and are measured using the currently  enacted tax rates and
         laws.

         Use of estimates
         These   consolidated   financial   statements  have  been  prepared  in
         conformity with generally accepted accounting  principles which require
         management to make reasonable estimates and assumptions that affect the
         reported   amounts  of  assets  and   liabilities   and  disclosure  of
         contingencies  at the date of the  consolidated  financial  statements.
         Actual results could differ from those estimates.

         Fair value of financial instruments
         The carrying value of cash and cash equivalents,  accounts  receivable,
         accounts  payable and accrued expenses  approximates  fair value due to
         the relatively short term nature of these instruments.



                                      F-8
<PAGE>

         Concentrations of credit risk
         Financial   instruments  which  potentially   subject  the  Company  to
         significant  concentrations of credit risk consist principally of cash,
         cash equivalents and accounts  receivable.  The Company places its cash
         with high quality financial institutions.  The Company performs ongoing
         credit   evaluations  of  its  customers  and  generally   requires  no
         collateral.  The Company maintains reserves for potential credit losses
         and historically such losses have not been significant.

         Accounting for stock-based compensation
         In October 1995,  the Financial  Accounting  Standards  Board  ("FASB")
         issued Statement of Financial Accounting Standards No. 123, "Accounting
         for Stock-Based Compensation" ("SFAS 123"). SFAS 123 established a fair
         value based method of accounting for  stock-based  compensation  plans.
         The Company  has chosen to adopt the  disclosure  requirements  of SFAS
         123, and continue to record stock-based compensation in accordance with
         Accounting  Principles  Board  Opinion  No. 25,  "Accounting  for Stock
         Issued to  Employees"  ("APB  25").  Under APB 25, the  Company has not
         recognized compensation expense with respect to such awards because the
         exercise  price of options  granted to employees has  approximated  the
         fair market value of the common stock at the respective grant dates.

2.       Liquidity and Business Risks

         The Company has incurred operating losses since inception, has incurred
         negative cash flows from  operating  activities  and had an accumulated
         deficit of  $41,338,047  and  $35,412,456  as of December  31, 1999 and
         1998, respectively.  The Company has had a limited operating history as
         a software  product company and has not made  significant  sales of its
         products,  therefore,  revenues are  difficult to predict.  The Company
         anticipates  that its cash and cash equivalent  balance at December 31,
         1999  may  be   insufficient   to  satisfy  its  operating   cash  flow
         requirements in the foreseeable  future. In this event, the Company may
         seek to sell additional equity or convertible debt securities, however,
         there can be no  assurances  that the Company  would be  successful  in
         raising  additional funds. The sale of additional equity or convertible
         debt  securities  would result in additional  dilution to the Company's
         stockholders.

3.       Supplemental Cash Flow Information
<TABLE>
<CAPTION>
                                                                       Year Ended
                                                                       December 31,
                                                                    1999         1998

<S>                                                             <C>          <C>
Interest paid during the period                                 $   53,207   $  154,065
Schedule of non cash investing and financing activities:
     Common stock options issued for consulting services           471,861      145,792
     Capital lease obligations entered into during the period         --         29,202
     Series A Preferred Stock, issued for Interim Financing         20,000
     Beneficial conversion feature of Series A and B
         Convertible Preferred Stock                                  --      2,251,438
</TABLE>



                                      F-9
<PAGE>

4.       Property and Equipment

         Property and equipment included the following:

                                                           December 31,
                                                              1999

         Computer equipment and software                   $2,077,342
         Furniture and fixtures                               197,675
         Office equipment                                     101,735
         Leasehold improvements                                40,348
                                                           ----------

                                                            2,417,100

         Less: accumulated depreciation and amortization    1,570,800
                                                           ----------

                                                           $  846,300
                                                           ----------

5.       Accrued Expenses

         Accrued expenses included the following:

                                                            December 31,
                                                               1999

         Executive compensation                              $255,577
         Compensation and related benefits                    182,704
         Consulting and professional fees                      37,073
         Commissions                                           18,012
         Other                                                 70,851
                                                             --------

                                                             $564,217
                                                             --------

6.       Borrowing Arrangements

         Interim financing
         During  May  and  June  1999,  the  Company   borrowed   $400,000  from
         stockholders  of the Company  evidenced by promissory  notes (the "1999
         Notes").  The 1999 Notes bore interest at 12% per annum and were due at
         the  earlier of June 30,  1999 or the  successful  consummation  of the
         Series C Private  Placement  (see Note 7). Upon the initial  closing of
         the Series C Private  Placement on June 28,  1999,  the 1999 Notes were
         repaid.


                                      F-10
<PAGE>
QueryObject Systems

Notes to the Consolidated Financial Statements
--------------------------------------------------------------------------------

         In September and October 1998, the Company borrowed a total of $490,000
         from  stockholders  of the Company  evidenced by  unsecured  promissory
         notes (the "1998 Notes"). The 1998 Notes bore interest at 12% per annum
         and  were  due  at  the  earlier  of  March  2000  or  the   successful
         consummation of the Series A and Series B Private  Placement.  Upon the
         initial  closing of the  Series A Private  Placement  in October  1998,
         $20,000  of the 1998  Notes  was  converted  into  Series  A Units  and
         $170,000  of the 1998  Notes was  repaid  through  December  1998.  The
         balance of  $300,000,  outstanding  at December  31, 1998 was repaid in
         full in January 1999.

         Loan receivable from officer
         In January 1998,  the Company loaned $65,000 to an officer and director
         of the Company.  The  promissory  note had a term of 24 months and bore
         interest at 8% per annum. In April 1999, the loan receivable was offset
         in full  against  amounts owed to the officer in  conjunction  with his
         separation from the Company.

         Loan payable to stockholder
         In May 1992, the Company entered into a borrowing arrangement whereby a
         stockholder  agreed to advance the Company funds at an interest rate of
         18% per annum.  Such  borrowings were  collateralized  by the Company's
         accounts receivable. In May 1996, the Company was in default of certain
         provisions  of the  agreement,  at which time the  stockholder  and the
         Company  amended  the  agreement  to reduce  the  interest  rate to the
         greater  of prime  plus 3% or 12% per annum and delay the time that the
         stockholder  could  demand  repayment  until  March  1998.  The revised
         agreement  required  the  Company  to set aside  funds in a  restricted
         account to the extent that the outstanding  borrowings  exceeded 80% of
         the  Company's  accounts  receivable  and to make  monthly  payments of
         $10,000,  plus  interest,  until  March  1998.  The  Company  paid  the
         obligation  in full during 1998 with funds in the  restricted  account.
         Interest expense related to this agreement was $64,067 for 1998.

7.       Stockholders' Equity

         Convertible preferred stock
         During  June,  July and August  1999,  the  Company  sold 45 Units (the
         "Series C Units") of Series C Preferred  Stock  totaling gross proceeds
         of   $4,500,000  in  a  private   placement   (the  "Series  C  Private
         Placement").  The  purchase  price  per Unit was  $100,000.  Each  Unit
         consists of 100 shares of newly-created  Series C Preferred Stock and a
         Common Stock  Purchase  Warrant  (the "Series C Warrants")  exercisable
         until December 28, 2001 to purchase 33,333 shares of Common Stock at an
         exercise price of $2.5875 per share. As described  below,  the Series C
         Warrants  have been called for  redemption.  The Company  received  net
         proceeds of  $4,089,791  and issued  4,500 shares of Series C Preferred
         Stock,  convertible  into an aggregate  of  1,739,133  shares of Common
         Stock and Series C Warrants  to  purchase  an  aggregate  of  1,500,000
         shares of Common  Stock.  As of  December  31,  1999,  there were 3,855
         shares of Series C Preferred Stock issued and outstanding.

         The Company  granted the placement agent and the selected dealer in the
         Series C Private  Placement options to purchase an aggregate of 146,667
         shares of Common Stock and paid commissions and non-accountable expense
         allowances equal to 7.1% of the gross proceeds received by the Company.

         In October and November  1998,  the Company had the initial  closing of
         two private  placements.  The Series A Private  Placement  consisted of
         1,750,000  Units (the  "Series A Units")  with a gross  sales  price of
         $3,500,000.  The Series B Private Placement  consisted of 10 Units (the
         "Series B Units")



                                      F-11
<PAGE>
QueryObject Systems

Notes to the Consolidated Financial Statements
--------------------------------------------------------------------------------


         with a gross sales price of $1,000,000. Each Series A Unit consisted of
         one share of Series A Preferred  Stock and a warrant to purchase .83 of
         a share of Common Stock at a per share  exercise  price equal to $1.50.
         Each  Series  B Unit  consisted  of ten  thousand  shares  of  Series B
         Preferred  Stock and warrants to purchase an aggregate of 41,667 shares
         of  Common  Stock at a per share  exercise  price  equal to  $1.50.  As
         described  below,  the Series A and Series B warrants  have been called
         for  redemption.  The Series A Units  were sold at a purchase  price of
         $2.00 per Unit and each Series A share is convertible into 1.333 shares
         of Common  Stock.  The Series B Units were sold at a purchase  price of
         $100,000  per Unit and each  Series B share is  convertible  into 6.666
         shares of Common Stock. The effective purchase price, on a common stock
         equivalent  basis was $1.50  per  common  share,  which  represented  a
         discount  from the fair market value of the  Company's  common stock on
         the various dates of issuance.  As of December 31, 1999,  1,609,375 and
         90,500 shares of Series A Preferred Stock and Series B Preferred Stock,
         respectively, were issued and outstanding. All subscriptions receivable
         as of  December  31,  1998 were  received by the Company in January and
         February 1999.

         In connection  with the Series A and Series B Private  Placements,  the
         placement agent was granted an option to purchase  additional  Series A
         and Series B Units equal to 10% of the Series A and Series B Units sold
         and received a commission and  non-accountable  expense allowance equal
         to 5.6% and 9.3%,  respectively,  of the gross proceeds received by the
         Company.

         The following is a description of the  securities  issued in the Series
         A, Series B and Series C Private Placements:

         Stated value
         Each share of Series A Preferred  Stock,  Series B Preferred  Stock and
         Series C  Preferred  Stock  has a  stated  value  equal to $2,  $10 and
         $1,000, respectively, per share.

         Liquidation preference
         Upon a liquidation  of the Company  (including a sale by the Company of
         all or substantially  all of its assets or a merger or consolidation of
         the Company with another Company where the Company is not the surviving
         entity),  the assets of the Company  available for  distribution to the
         stockholders of the Company (after payment or provision for liabilities
         of the Company),  whether from capital,  surplus or earnings,  shall be
         distributed  in the  following  order of  priority:  (i) first,  to the
         holders of the  Series A  Preferred  Stock and the  Series B  Preferred
         Stock to the extent of their  liquidation  preference,  (ii) second, to
         the holders of the Series C Preferred Stock, prior and in preference to
         any  distribution  to  the  holders  of  any  junior   securities  then
         outstanding  and (iii) third,  to the holders of issued and outstanding
         junior securities, including shares of Common Stock.

         Dividends
         The  holders of the Series A,  Series B and  Series C  Preferred  Stock
         shall not be entitled to receive any stated dividend payment.

         Conversion
         The holders of the Series A, Series B and Series C Preferred Stock have
         the right, at the holder's  option,  to convert each share of Series A,
         Series B and Series C Preferred  Stock into 1.333 shares,  6.666 shares
         and 386.33 shares, respectively, of Common Stock.


                                      F-12
<PAGE>
QueryObject Systems

Notes to the Consolidated Financial Statements
--------------------------------------------------------------------------------


         The Series A and Series B Preferred Stock were issued with a conversion
         ratio that  represented a discount from the market value at the time of
         issuance.  Accordingly,  the discount amount is considered  incremental
         yield  (the  "beneficial   conversion   feature"),   to  the  preferred
         stockholders  and has been  accounted  for as an  embedded  dividend to
         preferred  stockholders.  Based on the conversion terms of the Series A
         and Series B Preferred  Stock,  an embedded  dividend of  $2,251,438 or
         $1.32 per share,  was added to net loss in the  calculation of net loss
         per share in 1998.

         Voting
         The holders of the Series A, Series B and Series C Preferred  Stock are
         entitled to vote with holders of common stock on all matters  submitted
         for a vote  to the  stockholders  of the  Company,  on an  as-converted
         basis.

         Warrants
         Each Series A and Series B Warrant  entitles the  registered  holder to
         purchase  .83 of a share of Common  Stock,  subject  to  adjustment  to
         protect against dilution, at a per share exercise price equal to $1.50,
         commencing  on the  date of the  initial  closing  of the  Series A and
         Series B shares  Private  Placements,  respectively,  and ending on the
         third anniversary of such closings.  The Series A and Series B Warrants
         may be called for  redemption  by the Company at a redemption  price of
         $.01 per warrant upon not less than 30 days prior written notice if the
         closing  price of the Common  Stock  shall have been at least $4.80 per
         share on 20 trading days during any  30-consecutive  day trading period
         ending not more than three days prior to the date such notice is given.

         Each Series C Warrant  entitles  the  registered  holder to purchase at
         anytime until December 28, 2001, 33,333 shares of Common Stock, subject
         to  adjustment to protect  against  dilution,  at a per share  exercise
         price  equal to  $2.5875.  The  Series C  Warrants  may be  called  for
         redemption  by the Company at a  redemption  price of $.01 per Series C
         Warrant upon not less than 30 days prior written  notice if the closing
         price of the  Common  Stock  shall  have been at least  $3.60 per share
         (subject to adjustment in the event of a subdivision  or combination of
         the   shares  of  Common   Stock)  on  20  trading   days   during  any
         30-consecutive day trading period ending not more than three days prior
         to the date such notice is given.

         Common stock
         In  December  1999,  all  Series A, B and C  Warrants  were  called for
         redemption in accordance  with the guidelines  set forth above,  with a
         redemption  date in January  2000.  Certain  Series A, B and C Warrants
         were exercised during 1999,  prior to the call for redemption.  For the
         year  ended  December  31,  1999,  the  exercise  of  Series A, B and C
         Warrants  resulted in the issuance of 2,767,573  shares of common stock
         with  proceeds  to the  Company  of  $5,213,908.  All Series A, B and C
         Warrants were exercised and as a result, were not redeemed.  In January
         2000, the exercise of the remaining Series A, B and C Warrants resulted
         in the issuance of 591,697  shares of Common Stock with proceeds to the
         Company of $1,456,250.

         For the year ended  December 31, 1999, the holders of Series A, B and C
         Preferred  Stock  elected  to  convert  a total of  131,895  shares  of
         Preferred Stock into 475,061 shares of Common Stock.


                                      F-13

<PAGE>
QueryObject Systems

Notes to the Consolidated Financial Statements
--------------------------------------------------------------------------------


8.       Employee Stock Options

         In 1991, the Board of Directors  approved the 1991 Incentive Stock Plan
         (the "Plan"),  which was  subsequently  amended and allows the Board to
         grant either incentive or non-qualified  stock options to the Company's
         employees or consultants. The options expire generally between five and
         seven years from the date of grant. Individuals owning more than 10% of
         the total combined  voting power of all classes of stock of the Company
         are not eligible to  participate in the Plan unless the option price is
         at least 110% of the fair market  value of the common stock at the date
         of grant.

         A summary of the activity under the Plan is as follows:
<TABLE>
<CAPTION>
                                             Options                     Exercise
                                          Available for   Shares Under     Price
                                             Grant           Option      Per Share
                                          --------------  -------------  ---------

<S>                                           <C>           <C>       <C>   <C>
Options outstanding at January 1, 1998        303,834       287,475   $2.82-18.00

Additional shares authorized                1,285,333          --           --
Granted                                    (1,278,704)    1,278,704    2.82-18.00
Exercised                                        --          (4,127)   2.88
Canceled                                      100,040      (100,040)   2.88-18.00
                                           ----------  ------------   -----------

Options outstanding at December 31, 1998      410,503     1,462,012    2.82-18.00

Additional shares authorized                  666,666          --           --
Granted                                      (513,000)      513,000    2.59-15.00
Exercised                                        --         (33,333)         2.82
Canceled                                      100,000      (100,000)         2.82
                                           ----------    ----------   -----------

Options outstanding at December 31, 1999      664,169     1,841,679  $ 2.59-18.00
                                           ----------  ------------  ------------

Options exercisable at December 31, 1999                    836,310  $ 2.59-18.00
                                                       ------------  ------------
</TABLE>

         During  1999,  QueryObject  Systems  Corporation  and  IQO.com  granted
         103,333 and  750,000  non-qualified  stock  options,  respectively,  to
         consultants and recognized  consulting  expense of $471,861  related to
         non-qualified  stock  options  during 1999.  During  1998,  QueryObject
         Systems  Corporation  granted  319,933  non-qualified  stock options to
         consultants and recognized  consulting  expense of $145,792  related to
         these options during 1998.

         The Company  accounts for stock options  granted to employees under APB
         25 and has adopted SFAS 123 for disclosure  purposes.  Because  options
         granted to employees  in 1999 and 1998 had exercise  prices equal to or
         greater  than the fair market value of the  underlying  common stock at
         the respective grant dates, as determined by the Company's  management,
         compensation  expense has not been recognized in results of operations.
         The pro forma impact of SFAS 123 on the Company's results of operations
         related to options  granted  during 1999 and 1998 was immaterial to the
         Company's actual results of operations.

                                      F-14
<PAGE>
QueryObject Systems

Notes to the Consolidated Financial Statements
--------------------------------------------------------------------------------


         In  November  1998 and March 1999,  the  Company's  Board of  Directors
         approved an increase in the number of shares  reserved  for issuance to
         1,935,333 and  2,602,000,  respectively.  In November 1998 the Board of
         Directors  also  approved a  repricing  of 389,395  options  previously
         granted  pursuant to the Plan to a per share  exercise  price of $2.82,
         the  fair  market  value  on the date of the  repricing.  The  repriced
         options, which had original exercise prices of between $2.88 and $18.00
         per share,  have the same vesting terms as the original  option grants.
         All options issued during  November 1998 and thereafter  have a term of
         seven years from the date of grant.  Options  issued to employees  will
         vest over a three-year period and options issued to non-employees  will
         vest over two years.

9.       Major Customers and International Sales

         Sales to major customers, as a percentage of revenues, are as follows:

                                    Year Ended           Year Ended
                                   December 31,         December 31,
                                      1999                1998

            A                          -                   32%
            B                          -                   24%
            C                          22%                 10%
            D                          -                   14%
            E                          25%                 -
            F                          14%                 -
            G                          11%                 -

         At December 31, 1999, customers C, E, F and G represented 31%, 17%, 20%
         and 16% of total  accounts  receivable,  respectively.  At December 31,
         1998,  customers  C and D  represented  33% and 40% of  total  accounts
         receivable, respectively.

         International sales for the year ended December 31, 1999 were $873,900,
         or 49% of total  revenues and for the year ended December 31, 1998 were
         $157,500, or 17% of total revenues.

10.      Employee Benefit Plans

         The Company has a 401(k) savings plan (the "Savings Plan") covering all
         full-time  employees and  qualifying  part time  employees.  As allowed
         under Section  401(k) of the Internal  Revenue  Code,  the Savings Plan
         provides   tax-deferred   salary  reductions  for  eligible  employees.
         Employees are  immediately  eligible to participate in the Savings Plan
         upon employment.  Participants may make voluntary  contributions to the
         Savings Plan up to 20% of their compensation, subject to annual limits.
         The Savings Plan permits company contributions, however, none were made
         during the years ended December 31, 1999 and 1998.

11.      Obligations Under Capital and Operating Leases

         The Company is obligated  under capital leases for computers and office
         equipment  through 2001. All assets leased under these  agreements have
         been  capitalized  and the related  obligations  are  reflected  in the
         accompanying  consolidated  financial statements based upon the present
         value of


                                      F-15
<PAGE>
QueryObject Systems

Notes to the Consolidated Financial Statements
--------------------------------------------------------------------------------


         future  minimum lease  payments.  In addition,  the Company  leases its
         office facilities and certain furniture and equipment.  These operating
         leases are noncancellable and expire on various dates through 2004.

         The future minimum lease payments under capital and operating leases at
         December  31,  1999  and the  present  value of the net  minimum  lease
         payments are as follows:

                                             Operating                 Capital
Year Ending December 31,                       Leases                  Leases
                                            -------------        --------------

2000                                        $    578,726         $    170,544
2001                                             581,408               10,001
2002                                             604,661                    -
2003                                             628,828                    -
2004 and thereafter                              671,486                    -
                                            ------------         ------------

Total minimum lease payments                $  3,065,109              180,545
                                            ------------

Less: amounts related to interest                                       9,354
                                                                -------------

Present value of net minimum lease payments                           171,191
Less: obligation due within one year                                  161,374
                                                                -------------

Long-term obligation under capital leases                       $       9,817
                                                                -------------


         During 1998 the Company refinanced  certain equipment  purchased during
         1997  under  a  sale/leaseback   agreement.   These  transactions  were
         accounted for as financings, wherein the property remained on the books
         and continues to be depreciated. Financing obligations representing the
         proceeds were  recorded and are reduced  based upon payments  under the
         lease over a 42 month period.

         Rental expense under operating  leases was $336,852 and 445,755 for the
         years ended December 31, 1999 and 1998, respectively.

         For the year ended December 31, 1999, the Company recognized $54,042 of
         sub-lease  rental  income.  The future  minimum  rentals to be received
         under operating leases at December 31, 1999 are as follows:


                                      F-16
<PAGE>
QueryObject Systems

Notes to the Consolidated Financial Statements
--------------------------------------------------------------------------------


                                                      Operating
Year Ending December 31,                               Leases

2000                                                 $  278,084
2001                                                    330,206
2002                                                    343,403
2003                                                    357,111
2004 and thereafter                                     371,446
                                                     ----------
Total minimum rentals receivable                     $1,680,250
                                                     ----------

12.      Income Taxes

         The tax effect of temporary  differences  and  carryforwards  that give
         rise to significant portions of the deferred tax assets and liabilities
         at December 31, 1999 was:

Deferred rent                                    $    116,917
Accounts payable                                      139,073
Accrued expenses                                      268,778
Deferred revenues                                      67,902
Software cost expense                                 268,804
Net operating loss carryforwards                   15,081,805
Research and experimental credit carryforwards        258,562
Other deferred tax assets                             476,561
                                                 ------------

     Deferred tax assets                           16,678,402

Depreciation                                         (377,737)
Accounts receivable                                  (492,619)
Prepaid expenses                                      (59,294)
                                                 ------------

     Deferred tax liabilities                        (929,650)

Net deferred tax assets                            15,748,752
     Less: valuation allowance                    (15,748,752)
                                                 ------------

Net deferred tax assets                          $       --
                                                 ------------


                                      F-17
<PAGE>
QueryObject Systems

Notes to the Consolidated Financial Statements
--------------------------------------------------------------------------------


         The Company has  recorded a full  valuation  allowance  against its net
         deferred  tax  assets  since  management  believes  that based upon the
         available  objective  evidence  it is more  likely  than not that these
         assets will not be  realized.  The  difference  between  the  statutory
         federal tax rate and the Company's  effective tax rate is primarily due
         to the valuation allowance.

         As of  December  31,  1999,  the  Company  has net  operating  loss and
         research and  experimental  tax credit  carryforwards  of approximately
         $37,705,000  and  $259,000,  respectively,  available to offset  future
         federal  taxable  income and tax.  These  carryforwards  will expire at
         various dates beginning in 2007 through 2019.  Under Section 382 of the
         Internal  Revenue Code of 1986,  as amended,  utilization  of prior net
         operating  losses  ("NOLs") is limited  after an ownership  change,  as
         defined in such Section 382. As a result of previous transactions which
         involved an  ownership  change as defined by Section  382,  the Company
         will be  subject  to  limitation  on the use of its NOLs.  Accordingly,
         there can be no  assurance  that a  significant  amount of the existing
         NOLs will be available to the Company.

13.      Commitments

         Employment agreements
         The Company has  entered  into  long-term  employment  agreements  with
         certain key members of management. The agreements provide each employee
         with base annual compensation and incentive  compensation  payable upon
         attaining  certain  corporate  targets  as  determined  by the Board of
         Directors. The agreements provide that in the event of the termination,
         other than for cause,  the executives will be entitled to twelve months
         of severance.  The aggregate annual  commitments under these employment
         agreements are $390,000 per annum for 2000 and 2001.

14.      Subsequent event

         During March 2000,  IQO.com began a private  placement of its Preferred
         Stock.  IQO.com  is  seeking  to sell up to a maximum  of 50 Units (the
         "Units") of its Series A Preferred  Stock  totaling  gross  proceeds of
         $5,000,000. The purchase price per Unit is $100,000. Each Unit consists
         of 125,000 shares of newly-created Series A Convertible Preferred Stock
         and a Common Stock Purchase Warrant, exercisable for a one year period,
         to purchase  125,000 shares of its Common Stock at an exercise price of
         $1.00  per  share.   The  Series  A  Convertible   Preferred  Stock  is
         convertible,  at the option of the holder, into Common Stock of IQO.com
         on a one share  for one share  basis.  There can be no  assurance  that
         IQO.com will be successful in selling all or part of this offering.


                                      F-18